Forest Labs to replace Seagate on S&P 500
Well, this may make FRX a perhaps briefly undervalued stock. The last several additions to the S&P 500 have all had nice increases, I believe. Index funds are obligated to buy them on the day they join the index, creating buying pressure in the millions of shares.
The best way to play them has been to buy as soon as possible. Arbitrageurs move in to buy them quickly, typically driving up the price. This will be my first index play, so perhaps a more knowledgeable person will weigh in.
In the market generally just when "everyone knows the pattern" - here index additions going up, there's a strong tendency for something unexpected to happen. Tread carefully, do your own dd, find a guru.
Bit of a stretch posting this here, but the FRX thread is out of the question, as a money-making $11 Billion company it holds no interest for SI bio afficianados, last post Aug. 27.
But seriously folks, this recognizes the increasing importance of the biotech sector, scientific advances, the cash flowing in. (Did you see IMNX pulling that $3.2 Billion! secondary uphill with ease on Black Monday?)
Doc
p.s. Contrary to the Reuters story, I don't see any evidence of "said Friday," I believe it was announced after the close Tuesday, Nov. 14th.
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FRX : FOREST LABORATORIES INC (NYSE)
Forest Labs to replace Seagate on S&P 500
NEW YORK, Nov 14 (Reuters) - Standard & Poor's said Friday drug maker Forest Laboratories Inc. (NYSE: FRX) would replace Seagate Technology (NYSE: SEG), the world's largest maker of hard disk drives, on the widely tracked S&P 500 index.
The date of the change has not been set.
Seagate is being acquired by Veritas Software Inc. (NASDAQ: VRTS), which is already part of the S&P 500. The deal is still subject to shareholder approval.
The S&P 500 is tracked by fund managers and changes to the gauge are often followed by heavy trading in shares of the companies affected as funds holdings are adjusted to match the index.
Forest Laboratories shares closed Tuesday up $6-5/16 at $127-7/8, off a year high of $141, but up from a low of $49. Seagate stock ended at $61-13/16, off a high of $79-3/16, but up from a low of $35.
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