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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (12958)8/19/2001 11:00:28 PM
From: jeffbas  Read Replies (2) of 78774
 
Madharry, your comment is interesting. With the key qualification that the parent company must be eminently solid, I have a bias toward tracking stocks. I believe that two main pluses generally far outweigh a main minus. The two main pluses are the fact that after they start trading they usually get sold off like crazy to ridiculous prices, because few want the small amounts of stock they end up with; and the fact that the tracking stock has the resources of the parent company to rely on, in many different areas, that a similar independent company often does not have, materially reducing the actual business risk versus a comparable standalone peer. The main minus is that management of the parent company may have conflicts of interest and may not let the management of the tracking stock division act truly independently.
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