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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (381)	11/12/1997 3:24:00 AM
From: Uncle Mikey	Read Replies (2) \| Respond to of 22640

As I understand it, ADRs (American Depository Receipts) are based on a fixed number of shares of the underlying stock. I don't know what the ratio is for TBR but let's say it is 10 shares = 1 ADR. In this case 10 shares of the stock that are traded in Brazil are in a bank here in the US for each ADR you buy. When you buy an ADR you are, in effect, buying the stock of the company, just as if you bought it in Brazil. The process has just been made considerably easier by bundling shares together in the form of an ADR. There are sometimes differences in shareholder rights (voting etc) that are different for foreign holders, including holders of ADRs. It makes no difference if a company is partially owned by a government, an investment firm, or a wealthy individual, your ownership of an ADR grants you "ownership" of a portion of the company, just as individual shares would. Interestingly ADR's sold in the US can sometimes have more influence on the performance of a stock in it's home market, than the other way around. Teva Pharmaceuticals, for example, is an Israeli company traded in New York and Tel Aviv. ADR action in New York generally sets the tone for action in TA. Sometimes an arb situation exists, where the stock is available more cheaply in one market or the other, but this generally does not last very long.