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Raytheon Technologies is now RTX. Shorter names have performed less well in the stock market lately.
Courtesy of Raytheon Technologies
what’s inside a name? It’s an age-old question asked by everyone, even Barrons.
Raytheon Technologies
(symbol: RTX) is now RTX. The change happened on Monday.
A reason for the company’s name change was not given, and RTX did not respond to a request for comment.
Longer names have recently outperformed shorter names in the stock market lately. The average yield of the shortest quintile of names in the
is around 15% over the past year. The longest names brought in around 19%. The average stock yield of the S&P 500 is also around 19%.
Companies with three-letter names, or shorter, did even worse than the shortest quintile. The average for two or three letter names is a dismal 3%. This list includes
3M
(MMM) and
AT&T
(T), although the & can count as another letter.
RTX now joins the list of three-letter companies. Its shares have returned less than 10% over the past 12 months. Investors are bullish on the aerospace industry as travel recovers from pandemic-induced lows, but defense stocks haven’t been as strong.
Airbus
shares (AIR.France) have returned around 30% over the past 12 months, while shares of
Northrop Grumman
(NOC) returned to almost zero.
The only thing RTX has going for it is a three-letter ticker. Longer stock symbols, or tickers, outperformed shorter ones last year. The S&P 500 three-letter tickers have returned around 17% on average over the past 12 months. One-letter stocks were terrible, returning around 2%.
The best are the four or five letter tickers. They have returned 25% in the last 12 months. It probably doesn’t hurt
Apple
(AAPL),
Nvidia
(NVDA),
You’re here
(TSLA),
Amazon.co.uk
(AMZN),
Microsoft
(MSFT),
Metaplatforms
(META), and
Alphabet
(GOOG) all have four-letter tickers. These seven have returned nearly 60% on average over the past 12 months.
Alphabet actually has two stock symbols, both of which are long. GOOG is the Class C stock and GOOGL is the Class A stock. Class C shares do not have voting rights. Alphabet also owns Class B shares which have 10 votes per share, effectively giving Class B shareholders control of the company. Class B shares are not publicly traded and the shares are owned by the founders and managers. Class A and C shares are up about 14% over the past year as of Tuesday’s open session.
If there’s an investing lesson to this, single-letter stock symbols tend to be taken by older companies, including AT&T,
Macy’s
(M,) and
Steel in the United States
(X). The market wants new technologies these days. Together, these three have returned to nearly zero over the past 12 months, with a big gain at US Steel offset by losses at AT&T.
It’s probably a bad idea to invest based on a company’s name or the length of its ticker symbol. In the end, the only takeaway from Monday’s news is that Raytheon has a new name.
Write to Al Root at allen.root@dowjones.com
