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Stock Symbols: An Extra “E” Doesn’t Mean Excellent

Stock Symbols: An Extra “E” Doesn’t Mean Excellent

When one of your stocks whisks by on the ticker crawl of your favorite financial program and its stock symbol looks unusually long, it’s time to put down the remote and chips and pay attention.
Extra letters on stock symbols carry significant information that can sometimes indicate bad news.

The sudden appearance of the letter “E” at the end of your NASDAQ-traded stock could affect your bottom line – negatively — as could addition of a “Q.” The “E” means the company isn’t meeting its federal reporting requirements (bad sign), while a “Q” means that maybe you should call your broker. Actually, “Q” means the stock has entered into bankruptcy proceedings, so calling your broker should probably be your next move.

The letter “D” slapped on a NASDAQ stock may seem disheartening, (it did in school anyway) but the NASDAQ “D” could go either way. It generally specifies a new issue, such a stock split, but if it’s a reverse stock split, it can mean a company’s in rocky times and is trying to avoid being delisted from the exchange (as opposed to a simple stock split where there’s good company growth and shares are split to bring the per-share price down to a more accessible level).

NASDAQ generally has four to five-letter ticker symbols, with the exception of the SEC allowing stocks that have moved from the NYSE to NASDAQ to retain their two or three symbol designations. If there is an X is behind the five letter symbols that is an indication that it is a mutual fund. The addition of an “.A” after a NYSE-listed stock means Class A shares and while logic doesn’t always prevail in these coding symbols, it does here as a “.B” suffix on NYSE-listed stocks means Class B shares.

If you see an extra symbol on a NASDAQ-traded stock that you own, and you don’t understand the meaning, check the exchange’s glossary for a quick reference. If you’re still in the dark, try checking the website of the company’s stock that you own. Call the investor relations department for an explanation. There are at least 26 extra symbol designations for special circumstances and if you are an active investor, it is helpful to know what that could mean for your investments.

Symbols are an important part of the stock trading process, helping with quick recognition of the company, and in some cases as mentioned, their current status. The additional letter, the suffix, is a quick-read heads-up to simply define a stock type or convey new information. Symbols can also change with significant corporate events such as mergers. There are also a variety of special codes to indicate other information about a stock such as SC designating a small cap stock and so forth. As you can see, some symbols have more immediate significance than others.

The modern letter-only symbols for the stock market were developed to create a national standard in a concise, abbreviated format. At the New York Stock Exchange, the oldest exchange in the US, you will find many well-established companies and blue chip firms. They feature anywhere from 1-4 letters in the ticker symbol and carry a “dot” or “period” in front of any extra letters. Stocks with 3 letter symbols could be on either the NYSE or AMEX exchange.

There are several other categories of investments that have ticker symbols and are publicly traded on exchanges including bonds, ETF’s (Exchange Traded Funds) and various commodities such as oil, gold and silver.

Once you’re comfortable with the symbol translations and the knowledge that the letter “F” after a NASDAQ stock isn’t cause for panic (“F” means Foreign – not the dreaded failing-grade F), you can monitor which letters might chip away at your assets and which letters might mean your balance sheet is rich enough to afford the real “OC.” Or, at least afford the 3-D, high-def, wall-mounted, flat-panel, big-screen OLED-TV to watch reruns of that Orange County ensemble drama celebrating lush lifestyles of California’s Newport Beach. And in that case, seeing “D” can be good.

What does this mean for you? As an investor, if you hold any securities at all, it is important to educate yourself and not simply count on professional advice. Being an informed investor is empowering. After all, it’s your money! To bone up on everything you should know about the symbol system of the market, an outfit known as ISRA (the Inter-market Symbols Reservation Authority) handles the coordination of symbols is very important. It comes under the OCC (Options Clearing Corporation). Knowledge is power!

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