Stock question...

Factual Questions
1

What stock will return the highest percentage this year?

Just kidding. :slight_smile:

But I do have a serious question:
Why might a particular company trade under two different ticker symbols? For instance I’ve found that Company WXYZ trades under the ticker WXYZ on the NASDAQ (or similar over the counter exchanges) but there is also another ticker listed WXYZP which is labeled Company WXYZ Capital Trust I. What is a Capital Trust?

I remember WAY back in the mid 90’s that sometimes companies would split off a subclass of shares to trade and I also remember the SEC was looking into these subclasses as some sort of Tax dodge. But that’s all I remember. I would appreciate any information/links the SD community can provide! Thanks!

2

NASDAQ uses a standard set of fifth letter codes - P indicates preferred stock:

http://www.fool.com/FoolFAQ/FoolFAQ0036.htm

That also gives the added code conventions for NYSE symbols.

3

Thanks for the reply Yabob. Your answer of course leads me to the question: What does first preferred stock mean? Why is it does it have different trading patterns than the original issue?

4

I mean, I know the fool explains it as:

“Preferred class of stock with priority over common stock in regard to earnings and/or liquidations.”

But if that’s true, then shouldn’t the two stocks trade at the same price?

5

There are two key dfferences between preferred and common stock:
[ul][li]Common stockholders get to vote; and[/li][li]Preferred stockholders get their cash before common stockholders if the company is liquidated.[/li][/ul]

A company can sell preferred stock as a means of raising money without diluting ownership of the company. You often see preferred stockholdings in mutual funds, which means slightly lower risk without the hassle of figuring out who gets the votes. Since preferred and common stock serve different functions, demand for each can vary and so will the price.