Tracking Stock

You run a company that makes arm hair trimmers. You have a division dedicated to knuckle-hair curlers. You are considering spinning the unit into its own standalone company.

As a preliminary step, you set up a tracking stock for that division. Basically, it involves creating a publicly traded stock just for that single division. Then you'll report two sets of financial information...one for the main arm hair trimming business (not including anything from the knuckle products), and a complete set of financial statements for the knuckle unit on its own.
The knuckle stock will trade on the public market, like a regular stock. It lets the separate division get its own valuation.

Companies often use the tracking stock strategy if they have an old-line, slow-growth business as well as a high-growth business under the same umbrella (say, your grocery store chain also runs a cutting edge app development studio). The market ends up undervaluing the high-growth assets (because they get subsumed into the larger structure).

To unlock this value, companies will let the high-growth business spread its wings a little by launching tracking stocks for them.