Stocks listed on the NYSE Euronext exchange have trading symbols that consist of 1-3 letters. NASDAQ listed and over-the-counter stocks mostly have symbols containing 4 letters. Those letters are typically a close abbreviation or acronym of the underlying company, so they are easier to remember and associate with specific companies.
However, some NASDAQ and OTC stocks have 5 letters in their symbol. When this is the case, the 5th letter has a specific meaning that isn’t tied to the underlying company. Most of the 5th letter identifiers, as they’re referred to by NASDAQ, are related to various classes of stock, such as class A or B shares. When that’s not the case, the 5th letter can be a serious warning to investors. This is particularly the case if you have a stock with a 4 letter ticker symbol that suddenly has a 5th letter added to it. If you ever see a symbol change from 4 to 5 letters, you’d better be very aware of what’s going on with the company.
As you can see, most of them are innocuous, but if you see a 5th letter of C, E, Q, V, Z, or L, you need to do some research before initiating any new positions, or continuing to hold a current position. Unfortunately, if you are long a stock and one of the ominous 5th letters shows up, it’s often too late to do much about it. You should always stay on top of your due diligence so you’re never caught by a surprise 5th letter.
Below is a list of the current 5th letter identifiers currently in use:
A – Class A Shares
B – Class B Shares
C – Issuer Qualification Exception – (The company is not meeting all listing requirements, but can remain on the exchange for the time being. Obviously, a cause for serious concern.)
D – New Issue
E – Delinquent – (They haven’t filed a report per SEC regulations. Many times there’s a legitimate reason for this to happen to a solid company. However, if you see the “E”, make sure you do a lot of research. This could be a canary in the coal mine.)
F – Foreign Issue
G – First Convertible Bond
H – Second Convertible Bond
I – Third Convertible Bond
J – Voting
K – Non-voting
M – Fourth Preferred Issue
N – Third Preferred Issue
O – Second Preferred Issue
P – First Preferred Issue
Q – Bankruptcy – (The underlying company has filed for bankruptcy.)
R – Rights Issue
S – Shares of Beneficial Interest
T – Securities with warrants or rights
U – Units
V – When issued or when distributed (Shares that are set to split or have another similar pending corporate actions.)
W – Warrants
Y – American Depository Receipt
Z or L – Miscellaneous Situation – (This could mean just about anything. Definitely do your due diligence here.)
Others:
.PK – A Pink Sheet, indicating over-the-counter
SC – Nasdaq Small Cap
NM – Nasdaq National Market
Suggested Further Reading:
“Market Mover” – by Robert Greifeld
The former CEO and Chairman of Nasdaq shares insights and lessons learned from one of the world’s largest stock exchanges, detailing the company’s transformation from a fledgling U.S. equities market to a global financial technology company. You can find it in your favorite format on Amazon.
