A tracking stock is a stock that mimics the value of a part of
a company. This way the Company can unlock some of the hidden
value. AT&T recently issued a tracking stock (4/27/00) for
their wireless division (traded under the ticker AWE). Click
here
to see how they're doing. On 4/26/00 AT&T's stock closed
at a price of $51. With 3.19 Billion outstanding shares
this gives us a market cap (3.19 x 51) or 162 Billion. The
next day they issued their tracking stock which doesn't change
anything about the company, except that you can now invest you
money directly in their wireless business. For this, investors
feel this piece of business is worth 73.77 billion dollars as
of 5/1/00. With their current market cap valued at 146.6 billion
dollars, they've increased the market cap by 57 billion dollars
((146+73) - 162) as of 5/1/00, not too shabby.
Links
Some Tracking Stocks
| Tracking Stock | Parent Stock | Description |
| AWE | T | AT&T's cellular phone stock |
| ZDZ | ZD | Ziff Davis' stock to track performance of their internet business |
| GMH | GM | GM Hughes division of General Motors |
| DIR | DLJ | DLJ Direct, online brokerage of DLJ |
| PCS | FON | Sprint creates tracking stock for their wireless division |