Apple to join S&P 100

[AppleInsider]

Standard & Poor's on Wednesday announced that Apple Inc. will join its prestigious S&P 100 index of big blue-chip companies.

The consumer electronics maker will replace MedImmune Inc., a biotechnology company being acquired by Anglo-Swedish group AstraZeneca Plc.

The S&P 100, a subset of the S&P 500, is comprised of 100 leading U.S. stocks with exchange-listed options.

Constituents for the index, known by the ticker symbol OEX, are selected for sector balance and represent about 57 percent of the market capitalization of the S&P 500. S&P 100 companies also account for almost 45 percent of the market capitalization of the U.S. equity markets.

Stocks in the S&P 100 are generally among the largest and most established companies in the S&P 500. In past years, turnover among stocks in the S&P 100 has been even lower than the turnover in the S&P 500.

[ View this article at AppleInsider.com ]

[melgross]

A company is listed when there is room because of a de-listing. Otherwise the companies on the index are there for a long time. Only companies that are believed to be stable are added. If a company is no longer considered to be representitive of the indusrty, it is dropped.

[petermac]

So what is pushing Apple's price to beyond $120? Is it the imminent release of the iPhone? Does that mean the stock will drop in the weeks after the iPhone release. Then Apple again becomes a sub $100 billion company and then drops out of the S&P 100. Its going to take more to get Apple to $150 or even the $225 some analysts have predicted, I think.

[backcheck]

Originally Posted by petermac

So what is pushing Apple's price to beyond $120? Is it the imminent release of the iPhone? Does that mean the stock will drop in the weeks after the iPhone release. Then Apple again becomes a sub $100 billion company and then drops out of the S&P 100. Its going to take more to get Apple to $150 or even the $225 some analysts have predicted, I think.

Perhaps some of the increase occurs as index funds move to match the weighting of the OEX with their funds by buying Apple Stock. Good for AAPL.

[anantksundaram]

It is not an "invitation" to join (as the headline suggests) but rather, "will" join (as the text suggests). Apple has little say in matter!

[syklee26]

Originally Posted by petermac

So what is pushing Apple's price to beyond $120? Is it the imminent release of the iPhone? Does that mean the stock will drop in the weeks after the iPhone release. Then Apple again becomes a sub $100 billion company and then drops out of the S&P 100. Its going to take more to get Apple to $150 or even the $225 some analysts have predicted, I think.

it's several things. iPhone release is one thing, Analyst rating increases demand among buyers, and Apple's quarterly profit report would be another thing.

but most importantly, it's profit.

[Squirrel_Monkey]

Any takers on Apple joining the Dow 30 within 5 years?

[JeffDM]

Originally Posted by melgross

A company is listed when there is room because of a de-listing. Otherwise the companies on the index are there for a long time. Only companies that are believed to be stable are added. If a company is no longer considered to be representitive of the indusrty, it is dropped.

Apple is stable, but do they represent the tech industry? In many ways, they are their own island.

Originally Posted by anantksundaram

It is not an "invitation" to join (as the headline suggests) but rather, "will" join (as the text suggests). Apple has little say in matter!

I can't imagine any company that would not want to be on the list.

[TheToe]

FYI, for those not clear on the timing, the listing happens after the close of markets on May 31.

So AAPL will be on the 100 as of June 1.

http://www2.standardandpoors.com/spf...vanavaiter.pdf

[anantksundaram]

Originally Posted by JeffDM

I can't imagine any company that would not want to be on the list.

Of course they would want it. Anyone would. I am saying that the word "invitation" implies something that is offered as a suggestion, i.e., an invitee can (theoretically) say "yes" or "no." It is just that, much as they should be/will be justifiably proud, Apple does not have a say in the matter.

[JeffDM]

Originally Posted by anantksundaram

Of course they would want it. Anyone would. I am saying that the word "invitation" implies something that is offered as a suggestion, i.e., an invitee can (theoretically) say "yes" or "no." It is just that, much as they should be/will be justifiably proud, Apple does not have a say in the matter.

Where was invitation implied? Was the story's title changed?

[anantksundaram]

Originally Posted by Squirrel_Monkey

Any takers on Apple joining the Dow 30 within 5 years?

Nice observation: I think it is a virtual certainty. Many of the Dow 30 have mkt caps far below $100 billion (e.g., Disney $70B, Alcoa $35B).

But, as with the S&P100, they seek some sector balance. Currently, computer software/hardware-related companies in the Dow include Microsoft, IBM, H-P, and Intel.

[anantksundaram]

Originally Posted by JeffDM

Where was invitation implied? Was the story's title changed?

Yup! The previous version said something along the lines of "invited to join".....

[eAi]

Isn't Standard and Poor a really stupid name for a financial firm? It hardly makes you expect much of them...

[JeffDM]

Originally Posted by eAi

Isn't Standard and Poor a really stupid name for a financial firm? It hardly makes you expect much of them...

Maybe, but "Poor" was a guy's last name, and "Standard" apparently is the first name of a publication before a merger.

[Blah64]

Originally Posted by syklee26

it's several things. iPhone release is one thing, Analyst rating increases demand among buyers, and Apple's quarterly profit report would be another thing.

but most importantly, it's profit.

Also, in a very real and near-term influence is the fact tht many portfolio managers need to track the index, and are required to buy stocks that enter it. backcheck touched on this above, but if you don't already understand how it works, I'm not sure that description would make it clear.

From Wikipedia:

An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.

Tracking can be achieved by trying to hold all of the securities in the index, in the same proportions as the index. Other methods include statistically sampling the market and holding "representative" securities. Many index funds rely on a computer model with little or no human input in the decision as to which securities to purchase and is therefore a form of passive management.

There are many funds that 'track' various indices. And there are many indices. General ones like the Dow Jones Industrials or the S&P 500, as well as industry-specific indices like the Semiconductor Index (SOX) traded on the Philidelphia Exchange. The more popular the index, the more funds that will track it. And the OEX is well tracked, although I'm not sure how much compared to the S&P 500....

In any case, when a company joins an index, the fund managers will purchase shares in that company so they can continue to mirror the index (and conversely sell shares in the company that leaves the index). Any action that drives significant purchase of shares in a company is essentially taking shares off the open market and will move the price up. If you had all the details you could probably run an analysis of how many funds track the OEX and how many shares each of them will be required to buy, and come up with an estimate of the actual dollar value this would move the stock. But of course much of stock movement is psychological, so you'd still be guessing! ;-)

I'm sure there are folks here with much better knowledge that could give a more detailed explanation, but there's a start.

[Porchland]

Originally Posted by Squirrel_Monkey

Any takers on Apple joining the Dow 30 within 5 years?

AAPL trades on Nasdaq, so, sure, so I'm betting... NO.

[Dr. X]

Originally Posted by JeffDM

Maybe, but "Poor" was a guy's last name, and "Standard" apparently is the first name of a publication before a merger.

Here is some more information on Standard & Poor's:

Standard & Poor'S (S&P) was created by the 1941 merger and incorporation of Poor's, a financial publishing company founded by Henry Varnum Poor in 1867, and Standard Statistics Bureau, a publisher of daily indexes for ninety stocks that its founder, Luther Lee Blake, had begun tracking in 1906.

I got this from Answers.com

[thedonga]

I'm so glad I bought 1000 @ $21

[BicParker]

Originally Posted by Porchland

AAPL trades on Nasdaq, so, sure, so I'm betting... NO.

The Dow 30 used to only have NYSE components, but that isn't the case anymore. MSFT (Microsoft) is a Dow 30 component as is INTC (Intel Corporation), both of which are Nasdaq stocks.

The likelihood of AAPL becoming a Dow 30 component is, at this juncture, unlikely for several reasons, namely because they do not represent a broad and deep market presence that would be representative of their industry.

The Dow 30, unlike the S&P indexes, has little to do with market capitalization and its existence is more of a prestige index these days. It was created in a day when there were far, far fewer publicly traded stocks than there are now. It is not considered a broader market index like the Nasdaq or S&P 500 (or even the S&P 100 for that matter).

Frankly, I would be worried if Apple became a Dow 30 component. Look at MSFT since they became a member of the index.

[melgross]

Originally Posted by JeffDM

Apple is stable, but do they represent the tech industry? In many ways, they are their own island.

No, from this standpoint, they are just another company, which is as it should be.

They manufacturer computers, and software, so they are just another company in the indusrty.

[melgross]

Originally Posted by eAi

Isn't Standard and Poor a really stupid name for a financial firm? It hardly makes you expect much of them...

Like Apple is so great?

What do they do, sell juice?

[nvidia2008]

Originally Posted by petermac

So what is pushing Apple's price to beyond $120? Is it the imminent release of the iPhone? Does that mean the stock will drop in the weeks after the iPhone release. Then Apple again becomes a sub $100 billion company and then drops out of the S&P 100. Its going to take more to get Apple to $150 or even the $225 some analysts have predicted, I think.

It should hit $125 or even $130 now (instead of the $120 I predicted a while back) by WWDC June 11th.

The iPhone opens up a whole new market and huge growth potential. In this case then $200 by end of the year is possible, assuming no frack-ups. Failure would see the stock hammered down past $100.

Failure is not an option.

[meelash]

Originally Posted by melgross

Like Apple is so great?

What do they do, sell juice?

Classic!!

[nvidia2008]

Originally Posted by melgross

Like Apple is so great?

What do they do, sell juice?

Originally Posted by meelash

Classic!!

By the same token, Poor's has a negative connotation.

It's like if a juice company was called "Sour".
(In Asia there's "Soursop" but that's a whole different story.

There's no decent IT company called "Slow".

Though "Fry's Electronics" is a bit weird, no???

[MacCentric]

Originally Posted by melgross

Like Apple is so great?

What do they do, sell juice?

That reminds me of the story where in the 1970's some of Apple's computers were shipped in a refrigerated truck because they thought the boxes contained 'Apples."

[melgross]

Originally Posted by MacCentric

That reminds me of the story where in the 1970's some of Apple's computers were shipped in a refrigerated truck because they thought the boxes contained 'Apples."

Now that's cold.