Stock exchanges opt for lottery to award POT ticker symbol to some lucky company
POT used to be owned by PotashCorp but will be up for grabs at end of January
Canadian stock exchanges have decided to award the rights to use the "POT" ticker symbol via a lottery, after a deluge of requests for the marijuana-related moniker.
After what the exchanges call "significant interest" in using the symbol, the Canadian Securities Exchange, the Toronto Stock Exchange, the TSX Venture Exchange, and the Aequitas Exchange have jointly announced that they will award the right to use the ticker symbol P-O-T via a randomized lottery on Jan. 30.
The symbol was held for years and years by Saskatchewan fertilizer giant PotashCorp., which traded on the TSX. But Potash merged with Agrium in a deal completed last January, and the combined firm decided to call itself Nutrien Inc., listing itself under a new ticker, NTR, also on the TSX.
Under current rules, a ticker symbol must be dormant for a minimum of 53 weeks before it is up for grabs to a new company, and that waiting period just expired. The sudden availability of POT seems to have whet the appetites of a number of Canadian cannabis companies who want to use it, which is why the exchanges have taken the extraordinary step of awarding it by lottery.
Most companies tend to try to get a ticker symbol that is some sort of abbreviated version of the letters in their name, such as MSFT for Microsoft, BRK for Berkshire Hathaway, and C for Citibank.
Prominent Canadian examples include Canadian Pacific Rail, which lists under the symbol CP, the Bank of Montreal, whose ticker symbol is BMO, and BlackBerry, which lists under BBRY on the Nasdaq. (When BlackBerry was known as Research In Motion, its ticker symbol at the time was RIMM.)
David Baskin, president of Baskin Wealth Management in Toronto, said there is some history of companies choosing to list with ticker symbols that spell out an iconic phrase, such as garbage management firm Progressive Waste Solutions Ltd. which traded under the symbol BIN before being bought out by a larger rival, and Canada's largest cannabis company, Canopy Growth Corp., which already trades under the punny symbol of WEED on the TSX.
"Are more people likely to buy the shares with a cute ticker?I kind of tend to doubt it," he said in an interview. "But it's not the first time this has happened."
Finance professor Steve Foerster at Ivey Business School in London, Ont., said there is some evidence of a relationship between ticker symbols and company performance. He cited a recent study in the Journal of Financial Markets that found a relationship between the likeability of a company's stock ticker and how it does on the stock market.
The study found some evidence that companies with easy-to-pronounce ticker symbols outperformed other ones, all things being equal.
"If markets are truly efficient, then the ticker symbol shouldn't matter," he said in an interview, "but the conclusion there is that there may be something to whoever becomes the winner of the POT symbol."
The exchanges haven't said what companies have applied to use the listing, but it's not hard to see why a cannabis company would find POT appealing.
Cannabis companies are particularly attractive to retail investors, as the mania for pot stocks has made trading in some of the big cannabis names make up the majority of all activity on the TSX of late, Baskin noted.
"It's retail traffic, so maybe getting that ticker would propel your stock price," he says.
The exchanges say eligible participants who want to enter the POT lottery must notify the exchange where they are currently listed, or want to be listed, by 5 p.m. on Jan. 29. From that day, they'll have 90 days to meet the listing requirement, or the symbol will go back into a lottery for someone else to use.
Whoever wins the lottery won't be allowed to quickly flip the listing to anyone else, either.
"The symbol reservation will be non-transferrable and only the selected participant will be permitted to use the symbol," the Canadian Securities Exchange said in a press release.
If a cannabis company ends up with the winning ticket it would be oddly appropriate, Baskin said.
"It's a sideshow, but the whole industry is a sideshow," he said. "The valuations are nonsensical, so why shouldn't they be a little silly?"
With files from The Canadian Press