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#1
Old 10-10-2006, 05:07 AM
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Nestle stock: NSRGY versus NSRGF?

My wife and I would like to invest in Nestle stock. The problem we're experiencing is that there are two stocks listed under Nestle: NSRGY and NSRGF. One trades for about $88 per share, and one trades for about $350 per share. None of my Google searches is turning up any information about why there are two stock symbols and what the differences between them are (aside from price). Does anyone know more about this? If they represent two separate divisions of the same company, which one makes the candy bars and cocoa, et cetera?
#2
Old 10-10-2006, 06:25 AM
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From what I've read, neither of those symbols are for Nestle common stock. They are for ADRs, American Depository Receipts, which are an indirect way of buying a foreign stock. See http://ir.nestle.com/Stock_Finan.../ADRs+FAQs.htm.
#3
Old 10-10-2006, 11:17 AM
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If you buy shares of a foreign company on a US exchange you are buying ADRs. It doesn't make that much of a difference, as the ADR is tied directly to a share or shares on the foreign exchange, and usually has voting rights and so on. For instance, should you wish to buy Nokia as a US investor, you will probably buy shares of NOK on the NYSE, and for all intents and purposes they are shares in Nokia. You can also dig up information on various adr issues on http://adr.com (you'll have to accept a disclaimer to get to the site).

What IS notable about buying Nestle on the US market is that it is one of those established foreign companies that trades on pink sheets. On yahoo quotes, for instance, you will have to look up both those symbols as NSRGY.PK and NSRGF.PK. They do this because they do not wish to make reports to the SEC, as they would have to to trade on the NYSE. You should be aware of that. NSRGY is a 4:1 ratio according to adr.com - each NSRGY share corresponds to 4 actual shares of Nestle's. NSRGF may simply be a different issuance of ADRs, and represent more shares per ADR (presumably 16, since it trades at 4 times NSRGY). Or it may represent a different class of Nestle stock. Contact Nestle investor relations.
#4
Old 10-10-2006, 11:29 AM
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That's odd. Excuse me, I got that backwards. The NSRGY ratio is the other way around - each ADR is 1/4 of a share of the originating stock. Which would mean that the NSRGF issues are 1 to 1 if the represent shares of the same underlying issue. That would make sense.
#5
Old 10-10-2006, 12:08 PM
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One thing to notice is how thinly traded NSRGF is. You might want keep this in mind if you're going to buy this security. Thinly traded stocks have greater risk.
#6
Old 10-10-2006, 12:27 PM
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Quote:
Originally Posted by dalej42
One thing to notice is how thinly traded NSRGF is. You might want keep this in mind if you're going to buy this security. Thinly traded stocks have greater risk.
Usually a valid observation, except that this is an ADR for a giant European company, which you may expect it to closely track. NESN.F is the symbol for Nestle on the Frankfurt exchange, and you will note that they do track:

http://finance.yahoo.com/q/bc?t=1y&s...q=l&c=nsrgy.pk

That's NSRGY, not NSRGF - the second has only a short history (5 days). My guess is that Nestle decided to issue more shares on the American market, and just made the second issue 1-1 instead of 1/4 - 1, producing a rather high stock price. Again, contact Nestle investor relations to get the real answer.

Comparing an ADR with the issue on the foreign market it corresponds to is usually an illustration of the history of the currency exchange rate between the two countries. I'll bet the Mark rose suddenly against the dollar at some point in April.
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