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Financial terms in "Ipos"

1. secondary liquidity

2. book running manager

3. release letter

4. Secondary Market

5. Registration Statement

6. subsequent distribution

7. day to day (DTD)

8. directed share program

9. quiet filing

10. no par value share

11. allottee

12. Offering price

13. Exit Strategy

14. impact day

15. spinning

16. fund

17. Waiting Period

18. minority IPO

19. death star IPO

20. final negotiations

21. book building

22. hot stock

23. reallowance

24. assimilation

25. jumping the gun

26. date of issue

27. SCOR

28. Investment bank

29. general public distribution

30. Comment Letter

31. subscribe

32. Registered Company

33. Flotation

34. standby underwriting

35. beauty contest

36. allocation notice

37. shadow calendar

38. partial spinoff

39. price talk

40. break issue

41. Public Securities Association

42. gun jumping

43. IPO ETF

44. investment banking

45. new listing

46. small corporate offering registration

47. friends and family offering

48. institutional pot

49. quote-only period

50. direct financing

51. effective date

52. Lead underwriter

53. tombstone

54. NASD Form Fr-1

55. underwriter's warrants

56. distribution capability

57. Public Company

58. Oversubscribed

59. subscription period

60. co-underwriter

61. registration

62. calendar report

63. Dutch Auction

64. follow on public offer (FPO)

65. add-on service

66. primary distribution

67. offering size

68. carve-out

69. registration fee

70. competitive bid

71. Underwriter

72. syndicate member

73. Overallotment

74. management's discussion and analysis

75. offering range

76. first day close

77. reverse greenshoe option

78. due diligence meeting

79. originate

80. distributing syndicate

81. venture-capital-backed IPO

82. Reverse Takeover

83. rule 2790

84. Gross spread

85. liquidity event

86. floating security

87. investment banking group

88. Hot issue

89. repackaging

90. competitive offering

91. Underwriting

92. issue by tender

93. Reverse Merger

94. due diligence

95. dual-class ownership

96. all hands meeting

97. crossover investor

98. group sale

99. fully distributed issue

100. letter of comment

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Featured term of the day

Definition / Meaning of

Tracking Stock

Categories: Investing and Trading, Stocks,

Best defined with an example. Suppose Company A purchases a business from Company B and pays B with 1 million shares of A's stock. The agreement provides that B cannot sell the 1 million shares for 60 days, and also prohibits B from hedging by purchasing put options on A's shares or short-selling A's shares. B is worried that the market may fall in the next 60 days. B could hedge by purchasing put options or selling the futures on the s&p 500. However, it is possible that A's business is much more cyclical than the s&p 500. One solution to this problem is to find a tracking stock. This is a stock that has high correlation with A. Let us call it Company C. The solution is to sell short or buy protective put options on this tracking stock C. This protects B from fluctuations in the price of A's stock over the next 60 days. Because the degree of the protection is related to the correlation of A and C's stock, it is extremely unlikely that the protection is perfect. Multidivisional firms have used a form of restructuring called tracking stock since 1984 to segment the performance of a particular division -- similar to a spin-off or carve-out, except that the parent firm does not relinquish control of the tracked division. Previously, this was known as alphabet stock, but the technically correct name is tracking stock (e.g., EDS traded for years as a tracking stock of GM). This is a way to reward managers for good divisional performance with an equity that is tied to their division-rather than potentially penalizing them compensation for bad performance in a division they have no control over.

Most popular terms

1. Corridor Self-insured Retention
2. Earnings Before Interest, Taxes, Depreciation And Amortization
3. Likelihood Of Confusion
4. Committee On Uniform Security Identification Procedures (CUSIP) Service Bureau
5. Americans With Disabilities Act (ADA) Of 1990
6. Fill Or Kill Order (FOK)
7. Hacker
8. Special Crime Insurance
9. Sarbanes-Oxley Act Of 2002
10. Relative Strength

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