P (Fifth-Letter Identifier)

What Is P (as a Fifth-Letter Identifier)?

When used as the fifth letter in a ticker symbol, the letter P indicates that a security is a first-preferred stock issue. Preferred shares are equity shares that behave slightly like fixed income in that they grant higher priority than common shareholders and pay regular dividends higher than on common shares. A first-issue preferred indicates that it has priority over second- or following issues.

Referred to as a fifth-letter identifier, "P" and many other letters of the alphabet can be used to indicate that a security is not common stock, but has a special characteristic.

Understanding P as a Fifth-Letter Identifier

Fifth-letter identifiers are found on stocks listed on the Nasdaq and Over-the-Counter Bulletin Board (OTCBB). There are several different fifth-letter identifiers, ranging from A to Z, and each letter represents a different characteristic. While P indicates a first preferred stock, other examples of such characteristics and their identifiers include Class A shares ("A"), Class B shares ("B"), new issues ("D"), and foreign ("F").

The majority of the letters denote the same characteristics whether the stock is listed on the Nasdaq or OTCBB, but there are a few differences between Nasdaq fifth-letter identifiers and OTCBB fifth-letter identifiers. For instance, the OTCBB uses the letter "Q" to denote a company involved in bankruptcy proceedings, while the Nasdaq no longer does. In such a case, P refers to first-preferred stock on both exchanges.

Preferred stock ownership comes with greater rights than ownership of common stock. Preferred shareholders receive fixed dividends and are paid dividends before common shareholders. Preferred shareholders also have priority in being repaid if a company liquidates. However, bondholders have priority over preferred stockholders, and preferred stock dividends can be withheld at the company's discretion. Preferred shares usually do not carry voting rights, and most are callable, which means the issuer can redeem the shares at any time.

On the New York Stock Exchange (NYSE) stock tickers with special circumstances will instead often use a fourth letter.

Priority Matters

Bondholders, and especially bondholders of secured bonds have the highest priority when it comes to repayment or claims against a company. Common stock has the least priority. Preferreds fall somewhere in the middle. This is known as absolute priority or liquidity preference. In the event of a bankruptcy, preferred shareholders would be paid back in full before common stockholders receive anything.

When a company has more than one simultaneous issues of preferred stock, they are ranked according to priority. Those who hold first-preferred stock have seniority, particularly with respect to dividends and assets, over other preferred stockholders.

Preferreds thus also have an internal preference order, that will include those shares that are denoted as second-preferred stock (marked with the fifth-letter identifier "O"), third-preferred stock (denoted with "N"), and fourth-preferred stock (denoted with "M"). However, first-preferred shareholders are still subordinate to prior-preferred stockholders and bondholders.