Texas Pacific Land Corp., Cactus Inc. Rally on Addition to S&P Indexes, While Methode Electronics Falls

Jerry Kronenberg wrote a column · Jun 10 23:15

$Texas Pacific Land (TPL.US)$ and other stocks rallied more than 10% Monday, while $Methode Electronics (MEI.US)$ and others fell sharply after S&P Dow Jones Indices announced plans to add or remove them from the S&P 400 MidCap or S&P SmallCap 600 indexes.

S&P Dow Jones rebalances its indexes every quarter, adding new stocks and removing older ones when it believes doing so will better reflect the market for small or midcap equities.

Joining an index can send a stock higher because exchange-traded funds and mutual funds that aim to mirror the underlying index's return will buy shares in a newly added name.

Conversely, stocks that are leaving an index often fall as mutual funds and ETFs sell off their shares.

$KKR & Co (KKR.US)$, $CrowdStrike (CRWD.US)$ and $GoDaddy (GDDY.US)$ all rallied and attracted the biggest headlines Monday on word that they'll soon join the S&P 500, but some stocks joining or leaving S&P Dow Jones' smaller indexes also moved significantly.

TPL saw the sharpest percentage gain among stocks affected by the latest revisions, rising 19.9% to $697.61 shortly before 11 a.m. ET Monday on word that it will join the S&P 400 MidCap on June 24.

Other big percentage gainers as of shortly before 11 a.m. ET included:

-- $Cactus (WHD.US)$, which gained 12.8% on its planned addition to the S&P SmallCap 600.

-- $Tidewater (TDW.US)$, which added 11.1% to $103.85 on news that it will likewise join the S&P SmallCap 600.

-- $Altair Engineering (ALTR.US)$, up 10.6% to $94.53 on plans to join the S&P MidCap 400.

-- $Krystal Biotech (KRYS.US)$, +9.4% to $179.84 on its impending addition to S&P SmallCap 600.

Conversely, stocks that fell sharply on the news included:

-- $Methode Electronics (MEI.US)$, down 14.9% to $9.64 on word that it will exit the S&P SmallCap 600.

-- $Northfield Bancorp (NFBK.US)$, -11.7% to $7.26 due to S&P Dow Jones' plans to remove it from the S&P SmallCap 600.

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Jerry Kronenberg

Director of Financial Content

Former top editor at Seeking Alpha, Fidelity.com, TheStreet.com and UPI.

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