Culloden II: Invest in Scotland Stocks and ADRs? RBS, ABDNY & SSEZY

The poorly conceived Scottish Independence vote has failed – something that could be good news for Scottish stocks like Royal Bank of Scotland Group plc (NYSE: RBS), Aberdeen Asset Management (OTCMKTS: ABDNY) and SSE PLC (OTCMKTS: SSEZY) that have well traded ADRs on US exchanges. To begin with, its worth mentioning the work done by Paul Marsh of London Business School and Scott Evans of Walbrook Economics where they identified 100 purely Scottish stocks currently listed in London and compared this with a parallel 'Rest of the UK' index over the last 60 years. They found that £1 invested in the Scotsie 100 in 1955 would have grown to £648 today (with dividends reinvested), a 5.7% increase in real (inflation-adjusted) terms. However, £1 invested in the rest of the UK would have grown to £1,168, a 6.8% increase.

In addition and just before the Scottish Independence vote, Societe Generale said its basket of Scotland-exposed stocks had already underperformed the FTSE 100 by 8pc in the year-to-date, suggesting that "a risk premium is already emerging." They warned investors to stay away from the following Scotland exposed stocks (Note: Two of these stocks are actually French companies):

BAE Systems Lloyds Banking Group Royal Bank of Scotland Diageo Pernod Ricard J Sainsbury Tesco WM Morrison Standard Life British Sky BG Group Technip Hammerson Intu Properties Marks & Spencer Next Sage Group BT Group Centrica SSE

At the same time, they said the following stocks could benefit from a weaker pound:

BAE Systems Barclays HSBC Standard Chartered SABMiller Smiths Group Unilever Reckitt Benckiser Burberry Group WPP ARM Holdings British American Tobacco Experian

For American investors looking for Scotland ADRs, the Royal Bank of Scotland Group plc trades on the NYSE while Aberdeen Asset Management and SSE PLC have OTC listings. Here is what you need to know about all three:

Royal Bank of Scotland Group plc. Based in Edinburgh, Scotland, the Royal Bank of Scotland Group plc operates a wide variety of banking brands offering personal and business banking, private banking, insurance and corporate finance through its offices located in Europe, North America and Asia. In the UK and Ireland, the Royal Bank of Scotland Group plc's main subsidiary companies are The Royal Bank of Scotland, National Westminster Bank, Ulster Bank, Drummonds Bank and Coutts. Outside the UK, the Royal Bank of Scotland Group plc owns Citizens Financial Group, the 8th largest bank in the United States, and from 2004 to 2009 it was the second largest shareholder in the Bank of China. Its worth noting that the Royal Bank of Scotland Group plc has been serving customers in Scotland since 1727:

However and despite its long history in Scotland,the Royal Bank of Scotland Group plc had indicated it would move its Domicile to England or what was left of the UK as part of a contingency plan should a "Yes" vote pass, Since Scottish Independence failed to pass, that contingency plan is no longer in effect. On Thursday, Royal Bank of Scotland Group plc rose 1.55% to $11.76 (RBS has a 52 week trading range of $9.80 to $12.47 a share) for a market cap of $65.97 billion plus the stock is 4.4% since the start of the year, up 2.2% over the past year and down 36% over the past five years.

Aberdeen Asset Management. Based in Aberdeen, Scotland, Aberdeen Asset Management is a London listed global investment management group, managing assets for both institutional and retail clients from offices around the world. Aberdeen Asset Management manages pools of equities, fixed income, property and alternatives with most American investors probably being familiar with the various emerging market closed end funds the company has that are listed on the NYSE. In November 2013, Lloyds Banking Group sold the Scottish Widows Investment Partnership (SWIP) to Aberdeen Asset Management in a £660m deal that made the company the largest listed fund manager in Europe - managing £350 billion in assets. On Thursday, Aberdeen Asset Management rose 3.06% to $14.49 (ABDNY has a 52 week trading range of $11.32 to $17.05 a share) for a market cap of $9.24 billion plus the stock is down 12.08% since the start of the year and up 14.45% over the past year.

SSE PLC. Based in Perth, Scotland, and formerly known as Scottish and Southern Energy plc, SSE PLC is involved in the generation, transmission, distribution and supply of electricity, in the production, storage, distribution and supply of gas and in other energy services. SSE PLC has ownership interest in five economically-regulated energy network companies: Scottish Hydro Electric Transmission (100%); Scottish Hydro Electric Power Distribution (100%); Southern Electric Power Distribution (100%); Scotland Gas Networks (50%); and Southern Gas Networks (50%). However, SSE PLC operates beyond Scotland as its involved in electricity generation and electricity and gas supply in Great Britain; electricity generation and supply in the Single Electricity Market for the island of Ireland; gas supply in Northern Ireland and the Republic of Ireland; gas storage in Great Britain; and mechanical, electrical and utility contracting in the UK and Ireland. On Thursday, SSE PLC rose 1.82% to $25.11 (SSEZY has a 52 week trading range of $20.90 to $27.68 a share) for a market cap of $24.04 billion plus the stock is up 14% since the start of the year, down 0.44% over the past year and up 31.9% over the past five years.

Finally, here is a long term performance chart for all three Scottish ADRs:

As you can see from the above chart, Royal Bank of Scotland Group plc has been a loser for investors while the performance of Aberdeen Asset Management and SSE PLC have not been that exciting to warant the trouble of investing in ADRs listed on the OTC.