# OTC, LSE, Pinks.. Quick question please!



## Banalanal (Mar 28, 2011)

I want to buy Tesco, the retailer based out of the UK. I have an RBC direct investing account. It is listed as OTC and LSE on Morningstar. I have never bought anything that isn't Canadian or U.S. listed. Anything I need to know? I assume I can still buy it with RBC? Anything about share sizes? Taxes? Hope to buy tomorrow.

Thanks.


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## Causalien (Apr 4, 2009)

You'll be charged more commissions and the liquidity is bad. So you'll get eaten away by about 5% in the bid ask spread.


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## Banalanal (Mar 28, 2011)

Do I just call RBC via my direct invest account, and say I would like to buy X company? Is this a "pink sheet"? Any other risks? Quite a bit of volume with Tesco not worried. 5% sucks but this is a long term hold for me.


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## Banalanal (Mar 28, 2011)

And there are two listings, an ADR and the LSE stock on Morningstar. On RBC I can only get a quote on the ADR at 14.45$. But if I'm buying the OTC stock, wouldn't I be buying the LSE version and should see the 317.5$ quote? Or am I actually buying an ADR via the Nasdaq over the counter??

Thanks again.


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## Causalien (Apr 4, 2009)

You'll be buying the OTC version. i.e. the ADR. However double check because ADR actually means that it is traded on an exchange. While OTC (Over the counter) and pink sheet trades in an unregulated exchange.

The OTC/ADR/Pink sheet (.PK) version does not have the same liquidity as the London Stock exchange version. The liquidity will be whatever exchange RBC's trade desk is routing your orders through. 

Plus you will be phoning in and if I remember from my horrible time with RBC, they charge you $40 per phone trade.


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## Banalanal (Mar 28, 2011)

Ok thanks a lot for the quick responses.


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## humble_pie (Jun 7, 2009)

i for one don't think it's an adr, i think it's just a pink sheet foreign stock. These have symbols that end in "F" or "Y." This one is tscdy.pk.

a pink sheet foreign stock is actually, in the end, bought on the primary market, in this case london. No broker keeps any inventory of it in the US. A network exists that can, if you place an order tomorrow, move this order from your own broker to london.

the huge spread that Cause mentions conceals the hidden charges. You will be paying at least one, possibly two, FX fees (pounds/USD/CAD.) You will be paying extra charges for the handling of this difficult order. Very roughly, if the money involved is something like 5,000 or 10,000 USD, one would normally end up paying something like $150-$200.

if you seek to place your order directly on london, your broker can do this with a phone call. The commission is likely to be roughly $150, although some brokers have international trading capabilities with cheaper commissions. To best of my knowledge rbc online broker is not among these. This order would also have pound/CAD FX fees.

when you go to sell, you will have to go through the same hullaballoo. Is it really worth it. There are tens of thousands of common stocks in canada & in the US; surely you could find one that warms your heart as much as this british retailer.


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## Banalanal (Mar 28, 2011)

I'm going to call RBC tomorrow morning and inquire about the costs. I think it must be an ADR but there are three different levels of ADRs I believe. I don't think it would have a distinct share price from the U.K version if only the LSE version existed? 

As far as finding a stock in N.A. like this. I suppose I put the question back to you. If I'm willing to go through the hassle, it means I can not. Low debt, high fcf, strong economic moat, strong possibility of expanding well in the future, international exposure, large and sustainable dividend, out of favour with the market and bought by Buffet 20% higher a few months ago...I calculate, based on conservative and reduced metrics of its prior fcf growth average, a large margin of safety. Few and far between in my opinion at present.


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## Banalanal (Mar 28, 2011)

Turns out it is an ADR. Verbally agreed to the buying and selling of pinks contract. Now able to buy pinks online. Very easy process.


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## londoncalling (Sep 17, 2011)

Tescos are very popular shops in the UK. I have heard that their most recent plan is to add pharmacies to some of their locations. I can see this as a good move on their part.


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