What’s an ADR?
American Depository Receipts or ADRs are a means for U.S. investors to invest in overseas stocks easily. Here’s how they work: a U.S. bank buys shares in the international company. The bank then issues ADRs to U.S. investors. Because ADRs are issued by U.S. banks you don’t have to pay foreign taxes on them. Additionally, you don’t need to worry about converting your dollars to some other currency: both ADRs and their dividends are paid in dollars. Because ADRs are not actual shares in a company, they sometimes trade at a ratio to the shares themselves. For example, ADRs might trade at a 3:1 for the shares, meaning three ADRs are equal to one share of ordinary stock. Because of this, if you look up the share price for the ADR and the actual shares of the company on a foreign exchange, the two numbers may be different. There are three types of ADRs: Level 1: These are ADRs in which the foreign company doesn’t qualify or doesn’t want to be listed on a U.S. exchange. Consequently, the comp
