If the S&P held to its $4bn market cap hurdle, it would lose 166 components. With 75% of apparel S&P components under that level, this is something to consider.
What does it take to get removed from the S&P 500 Index? LIZ was booted last week due to not even coming close to hitting market cap hurdles. According to S&P, here’s what get’s you the boot from the index. One thing that is clear to me is that S&P has hardly been true to these standards on a consistent basis.
A company must “substantially” violate at least one of the following criteria for an “ongoing” period:
1) Market capitalization must exceed 4 billion
2) Adequate liquidity defined by having the ratio of annual dollar value traded to market cap great than 0.3
3) Corporate governance structure must be consistent with U.S. practice
4) The U.S. portion of revenues, operations, fixed assets, and employees must be a significant portion of the total.
5) Financial viability must be expressed through consecutive quarters of positive as-reported earnings and an operationally justifiable balance sheet.
6) Company should not be involved in mergers, acquisitions, or significant restructuring.
Recently, the Nasdaq temporarily removed their minimum market cap rule…
Below is a chart of the lowest market cap companies in the apparel space:
Zach Brown
Jr Analyst
What does it take to get removed from the S&P 500 Index? LIZ was booted last week due to not even coming close to hitting market cap hurdles. According to S&P, here’s what get’s you the boot from the index. One thing that is clear to me is that S&P has hardly been true to these standards on a consistent basis.
A company must “substantially” violate at least one of the following criteria for an “ongoing” period:
1) Market capitalization must exceed 4 billion
2) Adequate liquidity defined by having the ratio of annual dollar value traded to market cap great than 0.3
3) Corporate governance structure must be consistent with U.S. practice
4) The U.S. portion of revenues, operations, fixed assets, and employees must be a significant portion of the total.
5) Financial viability must be expressed through consecutive quarters of positive as-reported earnings and an operationally justifiable balance sheet.
6) Company should not be involved in mergers, acquisitions, or significant restructuring.
Recently, the Nasdaq temporarily removed their minimum market cap rule…
Below is a chart of the lowest market cap companies in the apparel space:
Zach Brown
Jr Analyst
