It's aimed at income investors who don't care much about capital gains. That's expected to be the more dynamic part. Only 32 tracking stocks have ever been issued, most of them since the mid-'90s, Minichiello says. Only 10 of them have done better than the market as a whole-almost all of them stocks that came out in the past two years. Of the 22 underperformers, many plunged while the market rose.
Companies create tracking stocks to try to raise the company's total stock market value.
But tracking stock carries extra risks, says Jeffrey Haas, professor of securities law at New York Law School. Say that your part of the business does well. In theory, your stock should rise. Before buying, you have to analyze both sides of the business. There are also huge conflicts of interest.