Trends Dominating The Most Popular ADRs

Dig into JP Morgan's ADR website, and you can find some unexpected trends dominating the most popular ADRs. For all the focus on emerging markets, the most widely held companies by dollar value and number of investors are some of the largest and best known foreign companies in the world. And almost all are located in developed markets. Another surprise: the lists are also dominated by three sectors: telecommunications, natural resources, and pharmaceuticals.

I. Most widely held Depository Receipts By Dollar Value

• America Movil (AMX)
• Nokia (NOK)
• BP plc (BP)
• Petrobras (PZE)
• Royal Dutch Shell (RDS)
• Vale (RIO)
• Teva Pharmaceuticals (TEVA)
• Vodafone (VOD)

II. Most widely held Depository Receipts by Number of Investors

• BP (BP)
• Nokia (NOK)
• Royal Dutch Shell (RDS)
• Teva Pharmaceuticals (TEVA)
• Glaxo SmithKline (GSK)
• America Movil (AMX)
• Novartis (NVS)
• Vodafone (VOD)
• HSBC (HBC)
• Diageo (DEO)

III. Top 10 Increased Depositary Receipt Investment Compared to prior quarter ($ value)

• China Southern (ZNH)
• Tenaris (TS)
• Royal Dutch Shell (RDS)
• Gazprom (OGZPY.PK)
• Vodafone (VOD)
• BHP Billiton (BHP)
• Norsk Hydro (NHYDY.PK)
• WuXi PharmaTech (WX)
• MTS (MBT)

This final category gives you the best indication of where the big boys- large, global institutional investors- are placing their most recent bets.

Unlike the first two lists, a couple of non-household names like Tenaris (TS), China Southern, Norsk Hydro (NHYDY.PK), Gazprom (OGZPY.PK) figure prominently on the list. Fewer than half of the stocks are based in developed markets, with China alone boasting two companies. Two of the most popular stocks - Norsk Hydro (NHYDY.PK) and Gazprom (OGZPY)- are available only on the pink sheets. This confirms that institutions don't limit themselves to the universe listed ADRs.

What lessons should you take away from these lists? Note the shift away from household names and developed countries. Also, watching the recent shifts in the weight of money behind the DRs of companies indicate where institutions that have the power to move markets expect these stocks go over the coming months. These are not stocks you should bet against.

Comments

[Bullrider72001:]

Is the correct symbol for Petrobras PBR and not PZE ????

2008 Jan 03 03:35 PM

[THofler:]

Yes, Mr. Vardy has the wrong symbol. The fourth most owned ADR is PBR, not PZE. I double checked the facts at the JP Morgan site.

2008 Jan 08 01:22 AM

[James Cullen:]

He isn't the only one who gets those crossed up:
seekingalpha.com/artic...

2008 Jan 11 04:24 PM