Tracking Stock

AAA

DEFINITION of 'Tracking Stock'

1. Common stock issued by a parent company that tracks the performance of a particular division without having claim on the assets of the division or the parent company. Also known as "designer stock".

2. A type of security specifically designed to mirror the performance of a larger index.

INVESTOPEDIA EXPLAINS 'Tracking Stock'

1. When a parent company issues a tracking stock, all revenues and expenses of the applicable division are separated from the parent company's financial statements and bound to the tracking stock. Oftentimes, this is done to separate a subsidiary's high-growth division from a larger parent company that is presenting losses. The parent company and its shareholders, however, still control the operations of the subsidiary.

2. The most popular tracking stock is the QQQQ, which is an exchange-traded fund that mirrors the returns of the Nasdaq 100 index. Another type of tracking stock is Standard & Poor's depository receipts (SPDRs), which mirror the returns of the S&P 500 index.

RELATED TERMS
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  2. Parent Company

    A company that controls other companies by owning an influential ...
  3. QQQQ

    The previous ticker symbol for the Nasdaq 100 Trust, an ETF that ...
  4. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
  5. Spiders - SPDR

    A short form of Standard & Poor's depositary receipt, an ...
  6. Spinoff

    The creation of an independent company through the sale or distribution ...
Related Articles
  1. Modernize Your Portfolio With ETF Futures
    Mutual Funds & ETFs

    Modernize Your Portfolio With ETF Futures

  2. What is a spider and why should I buy ...
    Investing

    What is a spider and why should I buy ...

  3. Index Investing
    Mutual Funds & ETFs

    Index Investing

  4. Emerging Market Bond ETFs: Look Under ...
    Mutual Funds & ETFs

    Emerging Market Bond ETFs: Look Under ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center