Why is this stock not in Vanguard funds?

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linenfort
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Why is this stock not in Vanguard funds?

Post by linenfort »

Care for a Saturday morning mystery?

I strove to write a clear topic title, but this question is not really just about one stock. It started when I was reading a stock newsletter. I don't use it for myself, but I trade at the request of an elderly relative. One of the new buys is Atlassian, with the ticker TEAM.

It is my habit to find any given stock in my index funds and pat myself on the back, although I cannot always find a company in my holdings. Atlassian piqued my curiosity because it is supposedly traded on the Nasdaq and is also a component of the Russell-1000 index.

When I didn't see this company in mid-cap or small-cap blend funds, my largest holdings, I searched for Russell-1000 at Vanguard and found the etf with the ticker VONE. Unfamiliar. The front page says, "Consider Vanguard Large-Cap ETF, which tracks the same market segment at a lower cost. Compare now."
Ok, no wonder. VV, that in-house Vanguard etf is certainly familiar. It didn't contain Atlassian either, though. It only holds 600 stocks whereas VONE holds almost the whole thousand in the Russell-1000, so fair enough. I guess I thought the missing 300+ stocks would be tiny or unimportant.

Searching this forum for VONE led me to Nisi's highly entertaining thread, Vanguard's "buried" (and redundant) ETFs

What homegrown Vanguard fund, then, does hold it? I stopped messing around and went to VTSAX, the total market fund. No, it's not in there. Is this a foreign company?

Admittedly, I don't know much about NASDAQ or Russell -- who needs to? I hold index funds. A little searching confirms that Nasdaq is an American platform. I knew that much. The Russell-1000 is maintained by FTSE Russell. Ok, foreign. And Yahoo Finance says that Atlassian is headquartered in London. That led me on a wild goose chase for a while, as the company was founded and is headquartered in Australia, in Sydney.

It's not in the iShares Australia-only etf. Is this some unknown company? It's in the Russell-1000. And, searching for the company name in this forum shows that some are familiar with its software products. They have been around a while, and they are global. I don't know if I can trust Yahoo Finance, but they show a $25 billion market cap and, while share prices are meaningless in most cases, the $105 price tells me this is not a penny stock.

I searched VEU, Vanguard's FTSE All-world Ex-US offering. Not easy to do, because at the moment there's a glitch on Vanguard's site that turns up nothing for VEU. You can search the holdings of the equivalent fund, VFWAX. Over 2750 stocks, but it's not in there.

It's not that I don't feel safe with my Vanguard fund holdings. I do. I think I'm well covered. I'm just curious. I only did all this searching because I enjoy looking at funds and companies.

I'm down to three main possibilites:
(1) The Russell-1000 is simply not important and if I knew more about this, it wouldn't be a mystery that it's not even in VEU.
(2) I'm searching wrong. I don't think so. You have to search Vanguard fund holdings by name, not ticker, but I also searched for TEAM Inc, just in case. And, I don't think the company has changed their name.
(3) A fund's holdings are not updated regularly enough to catch this. Well, I searched the Total US market and the the EX-US market. Seems like Atlassian would be in one of those behemoths all the time.

Is this company something like the United Kingdom version of an ADR, and therefore slipped through the cracks? How does Vanguard choose its international holdings, and does VEU just hold far fewer stocks than people think?
AlohaJoe
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Re: Why is this stock not in Vanguard funds?

Post by AlohaJoe »

linenfort wrote: Sat Feb 23, 2019 9:42 am And Yahoo Finance says that Atlassian is headquartered in London. That led me on a wild goose chase for a while, as the company was founded and is headquartered in Australia, in Sydney.
The headquarters are in London. It moved from Sydney to London in preparation for its IPO on the NASDAQ.
livesoft
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Re: Why is this stock not in Vanguard funds?

Post by livesoft »

Maybe all the shares are closely held and not available for purchase by outsiders?

If you give me a few days, then I can get info from my Sydney investment banking contacts and find out more.
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linenfort
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

AlohaJoe wrote: Sat Feb 23, 2019 9:48 am
linenfort wrote: Sat Feb 23, 2019 9:42 am And Yahoo Finance says that Atlassian is headquartered in London. That led me on a wild goose chase for a while, as the company was founded and is headquartered in Australia, in Sydney.
The headquarters are in London. It moved from Sydney to London in preparation for its IPO on the NASDAQ.
Thank you. I was just searching the ticker at Vanguard, and noticed they also wrote London. The Wikipedia entry is out of date.
livesoft wrote: Sat Feb 23, 2019 9:48 am Maybe all the shares are closely held and not available for purchase by outsiders?

If you give me a few days, then I can get info from my Sydney investment banking contacts and find out more.
:wink: That would be a cruel pick for a stock newsletter, then.
alex_686
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Re: Why is this stock not in Vanguard funds?

Post by alex_686 »

FTSE Russell is not exactly foreign, and that really does not matter. It is a news / data services and operates around the world.

What is more important, I think, is that it trades on the NASDAQ GS exchange, not the NASDAQ. The GS exchange is for smaller, younger companies. Critically, its listings requirements are lower than NASDAQ. Lower volume, less disclosures, audits are not as detailed, etc.
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linenfort
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

The GS exchange is for smaller, younger companies. Critically, its listings requirements are lower than NASDAQ. Lower volume, less disclosures, audits are not as detailed
Aha! That is exactly what I was looking for. Thank you, Alex.
Nasdaq GS. I'd never even heard of it.

Wiki says
Global Select Market (NASDAQ-GS large cap) is a market capitalization-weighted index made up of US-based and international stocks that represent the Global Select Market Composite. The Global Select Market consists of 1,200 stocks that meet Nasdaq's strict financial and liquidity requirements and corporate governance standards. The Global Select Market is more exclusive than the Global Market. Every October, the Nasdaq Listing Qualifications Department reviews the Global Market Composite to determine if any of its stocks have become eligible for listing on the Global Select Market.
So while the companies might not be small, the market itself is exclusive. And that's Wikipedia. They were out of date on the company's HQ. They might be wrong on the nature of Nasdaq-GS.
UpperNwGuy
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Re: Why is this stock not in Vanguard funds?

Post by UpperNwGuy »

What is the NASDAQ GS?
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linenfort
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

Yes, I do see it in the GS/Global Select list:
https://www.nasdaq.com/screening/compan ... e=0&page=3
alex_686
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Re: Why is this stock not in Vanguard funds?

Post by alex_686 »

UpperNwGuy wrote: Sat Feb 23, 2019 10:07 am What is the NASDAQ GS?
NASDAQ GS is NASDAQ's second tier listing for small global companies which don't meet the requirements for a full listing NASDAQ. Think of it as the minor leagues - Maybe AAA, but still minor leagues.
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dkturner
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Re: Why is this stock not in Vanguard funds?

Post by dkturner »

If you go to the Morningstar website and enter TEAM you can pull up its data, including a list of the 15 or so largest institutional owners of the stock. The Vanguard Group is conspicuous in its absence from the list.
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linenfort
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

I guess I should add the disclaimer that I'm not plugging the stock or anything, even if this is already a smart crowd of indexers who are immune to that. Nor the newsletter. It is ok overall as long as one doesn't try to pick their own subset from the list, but still quite painful for me to see the losses from some of these stock trades. And it's not even my money! Just index.
HEDGEFUNDIE
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Re: Why is this stock not in Vanguard funds?

Post by HEDGEFUNDIE »

You guys are chasing down the wrong rabbit hole.

This is a Vanguard issue, pure and simple.

TEAM shows up just fine in the iShares Russell 1000 ETFs: IWB and IWP.

And btw, Atlassian’s Jira software is ubiquitous in software development. This is hardly some unknown small cap stock.
Valuethinker
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Re: Why is this stock not in Vanguard funds?

Post by Valuethinker »

alex_686 wrote: Sat Feb 23, 2019 10:17 am
UpperNwGuy wrote: Sat Feb 23, 2019 10:07 am What is the NASDAQ GS?
NASDAQ GS is NASDAQ's second tier listing for small global companies which don't meet the requirements for a full listing NASDAQ. Think of it as the minor leagues - Maybe AAA, but still minor leagues.
And be so very careful.

Junior markets often have very poor listing requirements.

If you saw "The China Hustle" documentary (One should) then it gives a good idea of how low quality these stocks can be.

The London AIM has massively underperformed the full FTSE All-share stocks.

We used to say there were 2 ways to invest in Vancouver Stock Exchange stocks.

One was to get a broker and buy stocks.

The other was to put your money on a table, cover it in lighter fluid and light a match.
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linenfort
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

HEDGEFUNDIE wrote: Sat Feb 23, 2019 10:28 am You guys are chasing down the wrong rabbit hole.

This is a Vanguard issue, pure and simple.

TEAM shows up just fine in the iShares Russell 1000 ETFs: IWB and IWP.
This is why I settled on the the particular topic title above, despite the fact that VONE has it.
And btw, Atlassian’s Jira software is ubiquitous in software development. This is hardly some unknown small cap stock.
Yeah, I mentioned that in post 1.
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

dkturner wrote: Sat Feb 23, 2019 10:25 am If you go to the Morningstar website and enter TEAM you can pull up its data, including a list of the 15 or so largest institutional owners of the stock. The Vanguard Group is conspicuous in its absence from the list.
Ah yes, Ownership tab.
Held by both "Contrafunds" and simple large-cap growth funds, but not Vanguard. Hmm.
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Re: Why is this stock not in Vanguard funds?

Post by HEDGEFUNDIE »

The only Vanguard fund it’s in is VMNFX, an active fund with a 1.54% ER :shock:

https://investor.vanguard.com/mutual-fu ... view/vmnfx
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Re: Why is this stock not in Vanguard funds?

Post by Epsilon Delta »

Valuethinker wrote: Sat Feb 23, 2019 10:29 am
The London AIM has massively underperformed the full FTSE All-share stocks.
IIRC there are some tax gimmicks for UK based AIM investors. So the AIM should under perform for the same reason Munis "under perform". Now it may under perform even worse than that... , but I would not invest in AIM stocks for the same reason I would not invest in California Munis.
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Re: Why is this stock not in Vanguard funds?

Post by alex_686 »

FYI, I just searched VONE and it does have it - at .04%.
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

alex_686 wrote: Sat Feb 23, 2019 3:53 pm FYI, I just searched VONE and it does have it - at .04%.
Yeah, Hedgefundie got that wrong. I guess I didn't make that clear in post 1. The stock is in the Russell-1000 so I searched for that in Vanguard and found VONE, a little known Vanguard fund that holds the Russell-1000. It's not cheap.

VV, the equivalent- well, the offering that Vanguard suggests is an equivalent to VONE, holds 300 or 350 fewer stocks, and not Atlassian.
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Re: Why is this stock not in Vanguard funds?

Post by alex_686 »

linenfort wrote: Mon Feb 25, 2019 11:14 am
alex_686 wrote: Sat Feb 23, 2019 3:53 pm FYI, I just searched VONE and it does have it - at .04%.
Yeah, Hedgefundie got that wrong. I guess I didn't make that clear in post 1. The stock is in the Russell-1000 so I searched for that in Vanguard and found VONE, a little known Vanguard fund that holds the Russell-1000. It's not cheap.

VV, the equivalent- well, the offering that Vanguard suggests is an equivalent to VONE, holds 300 or 350 fewer stocks, and not Atlassian.
BTW, what don you mean that VONE is expense?

Then we are probably back at index construction. It is foreign. It is listed on a second tier exchange - which indicates some combination of low quality audits, low liquidity, or low minority investor protections. FYI, all of these are yellow lights for me - not read lights. You need to research why they are on the GS instead of some other major exchange.

Or perhaps it is how Vanguard runs things. For larger indexes they use statistical selection because they can't fully replicate the underlying index. For example, low liquidity might cause Vanguard to select a different stock.
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Re: Why is this stock not in Vanguard funds?

Post by ivyhedge »

Based on data I found through 31 January 2019 in a research database I use routinely:

“TEAM” is held by 44 ETFs and 94 mutual funds. The Vanguard funds that have held the Class A shares recently are/were:

-U.S. Momentum Factor: 0.2%
-U.S. Quality Factor: 0.2%
-Russell 1000 Growth: 0.1%
-ESG U.S. Stock: 0.1%
-Russell 1000: <0.1%
-Russell 3000: <0.1%
-Total World: <0.1%
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Re: Why is this stock not in Vanguard funds?

Post by ThriftyPhD »

VT portfolio holdings:

Atlassian Corp. plc Class A 37,000 $3,670,320
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

alex_686 wrote: Mon Feb 25, 2019 11:23 am BTW, what don you mean that VONE is expense?
Why is it expensive? I'm not saying it's overpriced for what it does, just that it's not cheap. I'm spoiled by VTSAX and the small- and mid-cap blend funds, I suppose.

@ThriftyPhD, @IvyHedge. Interesting that Total World does have it. When I didn't find it in Total International (VTIAX/VXUS) or VFWAX/VEU, I didn't even bother to look at Total World. A mistake on my part.
Total international has 6,350 holdings and excludes the US. Total World, while it has more stocks (8,000), does not exclude the US so I made the false assumption that they also would not have it.
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Re: Why is this stock not in Vanguard funds?

Post by TropikThunder »

linenfort wrote: Mon Feb 25, 2019 12:50 pm
alex_686 wrote: Mon Feb 25, 2019 11:23 am BTW, what don you mean that VONE is expense?
Why is it expensive? I'm not saying it's overpriced for what it does, just that it's not cheap. I'm spoiled by VTSAX and the small- and mid-cap blend funds, I suppose.

@ThriftyPhD, @IvyHedge. Interesting that Total World does have it. When I didn't find it in Total International (VTIAX/VXUS) or VFWAX/VEU, I didn't even bother to look at Total World. A mistake on my part.
Total international has 6,350 holdings and excludes the US. Total World, while it has more stocks (8,000), does not exclude the US so I made the false assumption that they also would not have it.
Most people don’t know this (I assume), but Vanguard Total World only has the top ~1,600 or so US companies, not the complete CRSP Total Stock Market.
- Vanguard Total US: 3,514 stocks
- Vanguard Total Int’l: 6,386 stocks
- Vanguard Total World: 8,125 stocks

If you look at the FTSE indexes, you’ll see that the “missing” stocks are all US.
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Re: Why is this stock not in Vanguard funds?

Post by linenfort »

Good to know, thank you, Tropik. This thread has helped me to learn as much about Vanguard funds as about that silly stock!
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