A shortened version of the company’s legal name.
Benefit
The program allows you to easily locate a company name, even if it is abbreviated. American Depository Receipts are denoted by the letters ADR after the company name. For stocks with multiple share classes, the share class letter (usually A or B) will follow the company name.
Origin
The company’s legal name is found on the first page of its 10-K form. The shortened version is assigned by Morningstar.
Example
Morningstar covers only the most-traded share class of a stock. This provides financial advisors and investors with practically all of the necessary fundamental information on a company to help make a buy decision regarding any of the share classes.
For the Pros
Morningstar shortens the company’s name if it exceeds a certain number of characters. The name is abbreviated using Morningstar’s editorial style guidelines to ensure consistent abbreviations across all Morningstar products.
How new companies get added to Morningstar databases
New stock information is continuously being added to the Morningstar database. Once this data has been entered and proofed, we are able to begin including it in our publications. Unlike many of our hard-copy publications, our software products have a greater storage capacity, and more information can be readily added without affecting production schedules.
Generally, an IPO will be included in Advisor Workstation within four months of issue. However, big newsmaking IPOs can be added within weeks of first issue.
A note about American Depository Receipts (ADRs)
If you see the letters ADR after a company name, this means it is an American Depository Receipt. The majority of the foreign stocks listed in our database are ADRs, which represent shares of foreign companies traded in U.S. dollars on U.S. exchanges. They can be treated just like shares of domestic stock—you can buy or sell them through a broker, for example. However, ADRs aren’t actually shares of stock, they are tradable receipts for actual shares on deposit at a bank. The purpose of the ADR is to make investing abroad both simpler and less costly for the average individual, who has neither the expertise of a foreign-stock mutual fund manager nor the buying power to trade in the volumes necessary to reduce the cost of foreign-stock transactions.