FOOL ON THE HILL: An Investment Opinion
Ever wonder what method the New York Stock Exchange uses to grant single-letter ticker symbols to companies? There are 23, ranging from microcap Jackpot Enterprises up to $260 billion market cap Citigroup. With the exception of Citigroup and Qwest Communications, the "one-letters" have had a bad year, most recently including Ford with bad news and a lawsuit or two. Let's hope the one-letters can keep their Sesame Street sponsorships up.
As I understand it, the Children's Television Workshop (CTW), producers of Sesame Street, are canceling sponsorship of the show by the letter F as a result of its poor handling of the Bridgestone/Firestone recall. Next thing you know, the number 6 will pull out in a huff as well.
Of course, we're talking about those few, rare stocks that rate single-letter ticker symbol designations. In the first paragraph, we're actually talking about some of the stalwarts of American commerce: Ford Motor Company (NYSE: F), Gillette (NYSE: G), Kellogg (NYSE: K), Sears Roebuck (NYSE: S), AT&T (NYSE: T), Citigroup (NYSE: C), Venator Group (NYSE: Z), Qwest Communications (NYSE: Q), Agilent Technologies (NYSE: A), and USX-U.S. Steel Group (NYSE: X).
Most of these companies are household names. Others not so much, which, given the premium attached to ticker symbols, is a little surprising. O, for example, is Realty Income (NYSE: O), a real estate investment trust with 44 employees and a market cap of $600 million. Hardly the stuff of legend.
Of the 26 letters of the alphabet, only three do not have companies attached to them: I, V, and M. The last of these, M, has been set aside by the New York Stock Exchange should Microsoft (Nasdaq: MSFT) ever decide to make the jump to the Big Board. Given the performance of most of the other single-letter-designated companies this year, I doubt Ballmer & Co. will rush on over. Then again, given Microsoft's recent judicial travails, maybe it'd fit right in with this crowd.
There's something very serious about a single-letter ticker, something that says "old school." In spite of this, or maybe because of it, the one-letters have, by and large, taken a beating this year. I've got some theories, all of them completely half-baked, that I'm going to subject you to.
1. Ticker symbols don't change very often
I was pretty surprised this year when Qwest Communications jumped from its old Nasdaq symbol to the Big Board one-letter ticker. Surprised that a one-letter symbol was so freely available, but also surprised because Qwest's position as a next-generation data carrier makes it seem much more at home among the Young Turks of the Nasdaq than the Basset Hounds of the New York Stock Exchange. And, maybe that's why the one-letters are suffering so badly: It's not like there is an ongoing merit rating for companies and their tickers.
So, even though EMC Corp (NYSE: EMC) is four times the size of Eni S.p.a. (NYSE: E), there is no merit raise to the single ticker. Eni's got it, and unless they delist from the NYSE, they're gonna keep it. By the way, Eni is an Italian oil & gas company, with subsidiaries such as Agip (a name any Formula 1 racing fan will recognize). So, just as there is no recurring review process to make sure that the most deserving get the good phone numbers or the good Web addresses, the same holds true for NYSE ticker symbols.
If JDS Uniphase (Nasdaq: JDSU) wanted to become a one-letter, it would either have to take one of the two non-allocated ones or, most logically, try to get the letter J. Problem is, JDS would have to somehow displace the incumbent, $90 million slot-machine operator Jackpot Enterprises (NYSE: J). On that thought, how did a smalltime convenience store slots operator end up with this designation to start with? It's not like Jackpot is a fallen giant of commerce.
2. A long list of has-beens
Venator, the holding company for former Dow component Woolworth (which it recently shed), Sears, USX, and even Gillette were pillars upon which the commercial power of the U.S. was built. Then each slid off the road at a bend, and each is fighting obscurity. But, unless they are delisted, they aren't giving up the one-letter symbol. So, while a one-letter may communicate a certain weightiness, it may also communicate stodginess.
In this light, the addition of new-economy darlings Agilent Technologies and Qwest Communications seems somewhat incongruous. They're tomorrow's companies putting themselves among a list of yesterday's news. Perhaps there is an unavoidable lag in such a slow-moving piece of real estate as NYSE ticker symbols.
3. Illogical association
Of course, grouping companies by the number of letters in their ticker symbols may simply be a poor associative construct. It's up to the NYSE to determine if a company has the heft to rate a single letter, and a scanning of the companies tells me that the methodology is, at best, unevenly applied. Still, the number of one-letters that have had bad market years is pretty strange.
High-flyer Agilent Technologies got pounded in July due to quarterly earnings woes; Ford has a tire supplier that can't figure out how to make rubber stick to itself; AT&T can't seem to articulate on or execute its business strategy, which suddenly seems to be some form of accumulating debt. And, US Airways (NYSE: U), the Rodney Dangerfield of the major U.S. airlines, is seeing its merger agreement with United Airlines parent UAL Corp (NYSE: UAL) threatened by continuing labor troubles at United.
It just seems that there's not much in the way of good news coming from this group as a whole. Qwest's merger with U S West was approved, and Citigroup (NYSE: C), the best performer of the bunch, has had significant share appreciation without any single event driving it -- well, unless you count general excellence as an event. Nothing that tickles the news wires, at least.
So, I hope that J and F remain financially situated so that they can continue their sponsorship of Sesame Street. If not, maybe CTW can widen its net a bit; I understand there's a certain CSCO that could spare a buck or two to keep Oscar & Co. on the air.
Bill Mann, TMFOtter on the Fool Discussion Boards