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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27244  
Subject: Re: Companies with multiple stock tickers Date: 2/13/2014 11:51 AM
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All of the companies you're looking at a foreign. Multiple tickers often confuse folks. It IS possible for a company to directly list on multiple exchanges. Some large Canadian companies do it. Some oil companies do it. That's NOT what's going on here, though.

These aren't actually different stocks. They're the same stock, kind of, LOL.

The three letter tickers you list are the actual stock as it trades on its OWN exchange overseas. The five or four letter symbols are for ADRs (American Depository Receipts). You did have a typo or two in there...

These are essentially trusts that hold foreign stock for US investors. The ADRs were invented by JP Morgan 100 years ago or so, to provide US investors a way to buy European stocks here in the US.

The investment bank sponsoring the ADR holds shares of the company in question on the FOREIGN exchange. They sell ADR shares that represent a portion of those holding to US investors. They essentially make a market here in the US, without a formal listing. For large companies, that's often on a major exchange. For smaller companies, that's often on the NASDAQ OTC (over the counter) market. These all appear to be OTCs.

For little ones, they can become illiquid, especially at times of market stress, getting out of step with overseas shares. There can be some liquidity risk as a result. In that respect that act like all small cap stocks. Look for how strong volume is and how wide spreads are (the "spread" is the difference between bid and ask prices). If spreads are wide and volume is thin, use LIMIT orders or you can get scalped, and compare their price action to overseas action to make sure that some manipulation isn't afoot.

For the most part though, if the company of interest is a solid going concern, there's little difference between buying the ADR and the actual overseas stock. You may not even be able to buy a German stock through your broker anyway, depending upon who you use. That makes the issue moot.

Here's JP Morgan's ADR devoted site for reference and education materials on ADRs:

This is BNYMellon's similar site:

Both are fairly comprehensive, but many smaller ADRs and Canadian ADRs are still missing. The only way to dig on those is to roll your sleeves up and start surfing the internet.

And always, let the buyer beware when you're looking at these little ADRs. If you're buying BP on the NYSE (actually an "ADS"; a relative of ADRs), you know what you're dealing with... With anything off the beaten path though, UNDERSTAND before you buy. While there are a few diamonds lost off the beaten path, you'll also run across crooks when exploring those fringes.

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