In general, the performance of tracking stocks has been uninspiring. They're considered second-class because in most cases they bestow no ownership on the holder and pay no dividends. They simply allow investors to track the financial performance of a division. But that all changed this year, as trackers have come into fashion. Touting the Trackers Telecom analysts who were ambivalent about tracking stocks just a few months ago are now touting them as the best way for companies to unlock their performance potential.
Consultants are on board, too.
Our thinking is to get clients to focus in around a particular customer set. Sprint PCS is the tracking success story that started the telecom herd in this direction. Since its November 1998 IPO, PCS shares have rocketed 437 percent, while the mothership Sprint has risen only 85 percent. Even a relatively obscure Canadian firm, Teleglobe , said it has consulted with investment bankers about putting its underperforming consumer long-distance unit under a tracker. Teleglobe shares have lost nearly half their value since January, and Chairman Charles Sirois says that stems from the company's inability to separate in investors' minds a division with problems from its successful global wholesale business.