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Foreign Stocks or ADRs …

May 9, 2010 By 2 Comments

BP Stock CertificateI have been thinking about our BP position over the past few days.  In fact, once I have gone through a few more years of back reports, I would even consider adding it to the blue chip reserve portfolio as an outright stock holding purely for the dividend income.  But that got me thinking … BP is a foreign stock that is traded on the London Stock exchange and is denominated in pound sterling currency.  Would we buy the American Depository Shares that are traded in the United States and entitled to dividends in U.S. dollars or would we actually buy the stock on its native exchange and hold it unhedged? I’ve talked about a close sibling of the ADS, the ADR, on my About.com site, in how ADRs work.

BP actually does a good job explaining the security on its website: “An American Depositary Share (“ADS”) is a US dollar-denominated form of equity ownership in BP, representing Ordinary shares on deposit in the United Kingdom (“UK”). An ADS carries significant rights arising out of those Ordinary shares. For example, it confers the right to receive dividends in US$, the right of registered ADS holders to attend BP shareholder meetings, and the right to vote on important matters before the Company.”

I like the idea of diversifying away from the dollar.  Of course, that really isn’t as much of a concern when you are dealing with commodities companies because even if the dollar were to become wallpaper, the product (oil and gas) would have value and could be paid for in Euros or whatever other currency still retained its worth.  That is why a company like Exxon-Mobile could actually benefit if the dollar were to fall in value relative to other currencies.

It doesn’t really matter much for our purposes, but it normally doesn’t take me long to make a decision.  I’m a bit stumped on what I want to do if we make the addition to our self-constructed index.

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  • http://www.adrtimes.com/ Articles on ADR

    Regardless if a facilitator, mediator or arbitrator is chosen there are things that all three roles have in common. This article discusses the commonalities as well as the differences in these three intermediary roles.

    The first thing all three intermediaries should have in common is an unbiased and objective nature. The third party to the dispute resolution session should have no hidden agendas or prepared statements. Although training and education requirements for a mediator or arbitrator are generally more intense, all three roles should have formal and documented training in conflict management.

  • http://www.adrtimes.com/ Articles on ADR

     
    Employment mediation is becoming increasingly commonplace in the work environment and has established itself as the

    favoured method to address conflict resolutions. With the economy in recession, there has been an increase in

    unemployment and in the difficulty of finding alternative employment. As a result, experienced employment mediation

    consultants are experiencing unprecedented demand for their services.