Why Loews's planned tracking stock for its tobacco business could burn investors:

LITIGATION RISK

Smokers won a $16.25 billion jury award from Loews in a Florida court. If it stands, Lorillard could be forced to declare bankruptcy.

POTENTIAL CONFLICTS

The Tisch family controls Loews and the tobacco business. But what's good for Loews may not be good for investors in the tracker. The stock sale proceeds go to the parent company.

TRACKERS DON'T TRACK

Research shows that tracking stocks perform poorly over time because of their hard-to-understand structures, weak shareholder rights, and the risk of conflicts of interest with the parent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE