NEW YORK Reuters - U. Samsung's success in taking market share with its cheaper smart phones is seen as a major reason for Apple's problems, making the South Korean company an obvious alternative for investors.

Instead, an unofficial version of Samsung trades on the over-the-counter market, commonly referred to as the Pink Sheets, under the ticker. Opting for these unsponsored shares, which trade on what's formally called the Grey Market, means you get nearly all the traditional benefits of owning the South Korean-listed version of Samsung shares, including any dividend payments, though they might not give investors voting rights.

But investors should be wary. And it's just as hard to jump in when the news is good.

An average of only unsponsored Samsung shares have traded over the past five days, according to Thomson Reuters data, compared with an average of , locally listed Samsung shares on the South Korean market during the same period.

The lack of liquidity could add costs such as higher brokerage fees and outdated price quotes when an investor wants to buy or sell.

Samsung, which didn't respond to requests for comment, is due to report its fourth-quarter results on January Its shares have gained As of September 30, there were 1, unsponsored ADRs trading in the United States, according to money management firm Cambiar Investors, compared with unsponsored ADRs traded in The rise in unsponsored ADRs came after a U.

Securities and Exchange Commission rule change in that allowed depository banks such as BNY Mellon and JP Morgan Chase to launch ADRs based on market demand without the consent of a company, according to Cambiar. Listing fees and SEC disclosure requirements have prompted major companies to bypass sponsored ADRS as well.

Swiss food and beverage company Nestle SA, German automaker Daimler AG and British brewer SABMiller Plc are among global companies that trade on the Pink Sheets.

Investors who purchase these shares in dollars still take on the same risk of currency fluctuations as owning foreign shares in the company's home market. Even so, there are reasons why small investors might take the risk and buy Samsung over-the-counter shares rather than go to the home market of an overseas company. Investors who want to take smaller positions could consider the over-the-counter shares, said John Wightkin, director of equity research applications at Charles Schwab.

How to buy Samsung stock - Business Insider

The cost to buy companies listed on the Pink Sheets tends to vary, based on an investor's account size and trading frequency. And investors would not be able to trade those shares on the South Korean market.

Larger investors, meanwhile, might want to opt to buy foreign shares directly in the target company's home market because of the liquidity. While brokerage houses such as Schwab are expanding services that allow retail investors to trade international stocks directly in local markets, South Korea is typically not among the offerings. Instead, customers must place orders through brokers, meet minimum order sizes and pay additional fees that can include exchange fees, foreign currency fees and local tax withholding.

Customers typically cannot trade on margin and must trade during foreign market hours as well. Its next largest position is in Hyundai Motor Co, with 5.

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How to buy Samsung stock - Business Insider

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You have successfully emailed the post. If You're A Fair-Weather Apple Investor Who Is Eyeing Samsung, There's Something You Should Know. The company isn't alone in its decision to stay away from official ADRs. Editing by Lauren Young, Andre Grenon and Bernadette Baum Copyright Thomson Reuters. Recommended For You Powered by Sailthru.

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