> 1) This is the first time tracking stock has been issued on a public company so there are alot of people out there who aren't really sure what to make of this class instrument yet.
I don't think it's the first time. https://en.wikipedia.org/wiki/Tracking_stock has some examples (although I don't know if those are public companies). I thought I had heard of other examples in the articles about the deal.
> 2) You'd expect a steep discount due to liquidity and lack of typical share holder rights. For example, if VMWare did pay a dividend, then the tracking stock would not necessarily have to pay that out to unit holders.
Sort of. The tracking stock is non-voting, but I'm not sure how much that matters. (You'd expect a small discount for that.) VMware doesn't have a dividend now, so I don't think that should influence the tracking stock price much.
> 3) EMC paid a dividend. There are alot of funds that bought EMC to get the dividend. They've been forced to sell the tracking stock as VMWare doesn't pay a dividend and the tracking stock won't pay one.
Sure, but theoretically VMW shareholders (anyone who thinks VMW is a buy or hold) should be incentivized to buy a bunch of cheap DVMT, propping the price up relatively close to VMW. Why do VMW shareholders think VMW is worth ~$73 but DVMT isn't worth more than ~$46?
I don't think it's the first time. https://en.wikipedia.org/wiki/Tracking_stock has some examples (although I don't know if those are public companies). I thought I had heard of other examples in the articles about the deal.
> 2) You'd expect a steep discount due to liquidity and lack of typical share holder rights. For example, if VMWare did pay a dividend, then the tracking stock would not necessarily have to pay that out to unit holders.
Sort of. The tracking stock is non-voting, but I'm not sure how much that matters. (You'd expect a small discount for that.) VMware doesn't have a dividend now, so I don't think that should influence the tracking stock price much.
> 3) EMC paid a dividend. There are alot of funds that bought EMC to get the dividend. They've been forced to sell the tracking stock as VMWare doesn't pay a dividend and the tracking stock won't pay one.
Sure, but theoretically VMW shareholders (anyone who thinks VMW is a buy or hold) should be incentivized to buy a bunch of cheap DVMT, propping the price up relatively close to VMW. Why do VMW shareholders think VMW is worth ~$73 but DVMT isn't worth more than ~$46?