Quiet period ended yesterday
I am invested VTI, VEU, and BND... The classic three-fund lazy portfolio in my taxable account. What are y'alls thoughts about adding a Russell 2000 index fund to the mix, or would it be redundant to VTI?
GameStop is no longer a small cap stock. It has a market capitalization of $18.4 Billion. To remain in the Russell 2000 small cap it would need to have a market capitalization under $5.2 Billion.
The decision on whether or not to move it to the Large Cap Russell 1000 will be announced after close on June 25th. The changes take effect on Monday June 28th.
Article referencing these dates and values
GME is part of many index funds and ETFs, some of them are specifically for small caps.
I have no idea what happens if GME is no longer designated a small cap. Does it need to be sold and moved out of those funds and ETFs?
adding. This link clarifies why this is a big deal
https://old.reddit.com/r/Superstonk/comments/nwywrm/posting_screenshot_for_visibility_a_lot_of_people/
As you guys are all aware, the first correction of Russell's annual reconstitution came out last night.
From their updated list, CLOV is deleted and UWMC was newly added to Russell 3000.
https://www.reddit.com/r/wallstreetbets/comments/nx3min/uwmc_added_to_the_russell_3000/
As you can see from the list, they don't indicate whether the company is in Russell 1000 or Russell 2000. Everything is written as 3000.
I was reading all replies and realized many people misunderstand the difference between Russell 1000, 2000, and 3000. Some guy even mentioned that CLOV was a better company so it was included in Russell 2000 and UWMC is not good enough to make it to Russell 2000, and only made to Russell 3000...
Here goes a simple explanation of what are Rusell 1000, 2000, and 3000 are:
Russell 1000 = The largest 1000 stock indexed in Russell 3000
Russell 2000 = The subset of smallest 2000 companies in Rusell 3000
Russell 3000 = Russell 1000 + Russell 2000
When they announce a company is included in Russell 3000, we only have half the news. It will be either 1000 or 2000. The easiest way to make an educated guess is to check the company's market capitalization.
If the market cap is large enough to be included in Russell 1000, probably it made to Russell 1000. If the company's market cap is smaller compared to large 1000, it will be included in Russell 2000.
I believe UWMC's market capital is large enough to be included in Russell 1000.
Please be aware that Russell 2000 is not better than Russell 3000. IMO, Russell 3000 is better because it is more diversified for smaller risks. Obviously, Russell 1000 is the best.
Link to Ape Andy video: https://twitter.com/andyleeck/status/1402513001299648514
"The reconstitution ranks and market cap breaks for the Russell Indexes are determined based on information available on rank day -- this year, May 7 -- according to Catherine Yoshimoto, FTSE Russell’s director of product management. An existing Russell 2000 index member would have had to have a total market cap exceeding $7.3 billion in order to move into the Russell 1000 index, she said." source: https://www.bloomberg.com/news/articles/2021-06-06/how-to-tell-whether-amc-and-gamestop-will-make-the-russell-1000
"The market capitalization breakpoint which separates companies in the US large-cap Russell 1000 Index and companies in the US small-cap Russell 2000 Index increased by 73% from $3.0 billion in 2020 to $5.2 billion for 2021." source: https://www.ftserussell.com/press/ftse-russell-begins-33rd-annual-russell-us-indexes-reconstitution
So to me it's not clear if the minimum capitalization to enter Russell 1000 is 7.3B or 5.2B, GameStop and its $11.97 billion market cap at may 7 would make no doubt its way to Russell1000!
Another big catalyst coming...
- Today several investment bank index desks put out projections for likely Russell 2000 index adds and deletions for the upcoming rebalance on June 25th.
- As you can see in the chart below, indexers will need to buy 3.9M shares of AST ahead of June 25th Russell 2000 rebalance (thanks to my friend thekookreport on twitter):
https://preview.redd.it/kdkidb84ozz61.png?width=1384&format=png&auto=webp&s=b4c890beab01b2188143d76cfe11509ab6fecf9f
- The current float of AST is approximately 36.9M shares, which is comprised of 23M shares from the IPO and 13.9M shares from hedge funds invested in the PIPE. I exclude the 7.2M shares held by strategics (they aren't selling) and "other" which includes Green Sands, which is a long term PE firm.
https://preview.redd.it/dw6p8nrqozz61.png?width=819&format=png&auto=webp&s=fadfd7dd2b2dc41a08a991c565bc2712b2de5680
- So basically indexers will need to buy 3.9M shares or 10.4% of the public float. They typically will start buying 1-2 weeks in advance... so there will be some buying pressure heading into the index add.
- Being part of the Russell 2000 will also improve liquidity for AST while also bringing additional attention to the name.
Special thanks to u/CatSE for doing great initial work around this!
Just another day of trading sideways!
From what i understand the index is required to purchase shares of the asset once it becomes part of their index. For example a stock i like a lot, KMPH, is being added to the Russell 2000 and 3000 index monday. Since the index must purchase the asset in large amounts, is the price not guranteed to increase at a meaningful percentage? Why should i not buy calls for this event. Surely it’s not this easy which is why and insight would be appreciated.
https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/genius-brands-set-join-russell-131500545.html
I encourage you not the only read this news but go read what they have been doing over the last month. You have them streaming on Amazon and Netflix as well as in China all the way to Latin America. They are putting together the pieces.
Good luck out there 👌
There has just been discussion in the discord about Hyliion getting into Russell 200 index fund next month. I wanted to share it here to hear what people think the implications of it may be, and why or why not Hyliion could get into the index.
https://preview.redd.it/glgjwha615271.png?width=603&format=png&auto=webp&s=75e035717bb167a85bb236ea82bf4d935376e326
The Russell 1000 and Russell 2000, collectively the Russell 3000 gets updated every June, called the Russell reconstitution. The initial list of companies to be added (subject to revision) was published last night.
https://content.ftserussell.com/sites/default/files/russell_3000_index_additions_-_2021.pdf
A lot of deSPACed public companies are on the list, including ours truly, Fisker!
Assuming Russell does not change its mind. At the closing price June 25th FSR will be added to the Russell 2000 index. This means all funds tied to that index, (think US small cap ETFs and mutual funds) need to buy a small weighting in FSR shares. And over time “closet indexers” small cap mutual fund managers will be pressured to have at least an equal weight in Fisker (even if said manager hates Henrik and is an Elon fanboy haha).
What this means for long term Fisker investors? Not much. Indexers try not to influence the price of a stock, but try to own all stocks. In the short-term this is bad news for the shorts who are short about 30% of the float (tradeable shares that exclude Henrik and Geeta’s extremely large stakes). It is estimated that Russell 2000 linked funds will buy approximately 5-10% of floating shares.
Index inclusion should change intraday stock behavior slightly, especially at the open. Those no news 5% opening gap downs in Fisker while the market indexes open up 1% will become more rare. No volume no news Intraday movement should become more correlated to IWM (R2 etf).
I want to see long term data. This is with yahoo finance app.. Am I not understanding something here?
It only shows from June 15, 2020 whereas when I look at other indexes for NASDAQ and S&P500 I can look back 20+ years. If I can’t go back with yahoo finance, how can I find the index for the small caps plotted on a timeframe that is longer in duration? Any advice?
GameStop is no longer a small cap stock. It has a market capitalization of $18.4 Billion. To remain in the Russell 2000 small cap it would need to have a market capitalization under $5.2 Billion.
The decision on whether or not to move it to the Large Cap Russell 1000 will be announced after close on June 25th. The changes take effect on Monday June 28th.
Article referencing these dates and values
GME is part of many index funds and ETFs, some of them are specifically for small caps.
I have no idea what happens if GME is no longer designated a small cap. Does it need to be sold and moved out of those funds and ETFs?
