Candidates for Nasdaq 100
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Prudential projects 13 candidates to Nasdaq 100
By Thi Nguyen
NEW YORK, Nov 8 (Reuters) - Prudential Securities Inc. on Thursday released its list of potential additions to the widely tracked Nasdaq 100 index (^NDX - news), and those likely to be cut when the index is rebalanced in mid December.
Of the 13 stocks Prudential thinks could make the list, six are health-care while 10 technology names are predicted to leave the index, according to Prudential.
Technology, however, will continue to represent the bulk of the highly volatile index with a weighting of about 70 percent representing 60 names, the investment bank said.
``The new index looks just slightly less expensive because we eliminated some of the high-flying tech names and added more health care,'' said Steven DeSanctis, an equities strategist at Prudential, in a note to clients.
Health-care stocks to be added include ImClone Systems (NasdaqNM:IMCL - news), Sepracor Inc. (NasdaqNM:SEPR - news), Invitrogen Corp. (NasdaqNM:IVGN - news) and Cephalon Inc. (NasdaqNM:CEPH - news), according to Prudential.
Tech names that will likely be deleted from the index include Novell Inc. (NasdaqNM:NOVL - news), Palm Inc. (NasdaqNM:PALM - news), Ariba (NasdaqNM:ARBA - news) and CNET Networks (NasdaqNM:CNET - news), the firm said.
At rebalancing, the index members on average will trade at 42.25 times forward earnings, slightly below the current level of 42.48, said DeSanctis.
The Nasdaq 100 has about $21.6 billion indexed to its performance, and typically, stocks added rise at the rebalancing as index money managers buy so their funds closely mimic its composition. But some investors might place early bets on potential new index members to avoid the buying spree that occurs as the rebalancing draws near.
This year's rebalancing will take place after the close of trading on Dec. 21, said Prudential. Typically, Nasdaq will release the list of additions and deletions in the second week of December.
``Stocks that do move in and out of the benchmark may experience some strong buying and selling pressure leading up to the rebalancing,'' said DeSanctis.
If Prudential's list is accurate, education stock Apollo Group (NasdaqNM:APOL - news) will see the most buying pressure with some $43 million worth of shares to be bought, while Novell may see the most selling pressure with $33 million worth of stock to be sold, DeSanctis said.
The composition of the index is determined by the Nasdaq Stock Market, based in Washington. For a stock to be selected it must rank among the top 150 stocks on the Nasdaq stock market by market value, have an average daily trading volume of at least 100,000 shares and not be in the financial sector, among other conditions.
The Nasdaq 100 index was first published in January 1985. The Nasdaq 100 has lost 33 percent in 2001, much worse than the Nasdaq Composite index (^IXIC - news), which fell 24 percent, and the Standard & Poor's 500 (^SPC - news), which is down 14.4 percent.
Figure 1. Stocks To Be Added To The Nasdaq 100 Index
Ticker Name Weight Sector
APOL Apollo Group 0.22 Consumer Services
IMCL ImClone Systems 0.21 Health Care
CHTR Charter Communications 0.19 Consumer Services
SYMC Symantec Corp. 0.19 Technology
CDWC CDW Computer Centers 0.18 Consumer Services
SEPR Sepracor Inc. 0.17 Health Care
IVGN Invitrogen Corp. 0.15 Health Care
ESRX Express Scripts 0.15 Consumer Services
CEPH Cephalon Inc. 0.15 Health Care
ICOS ICOS Corp. 0.14 Health Care
CYTC CYTYC Corp. 0.14 Health Care
IDTI Integrated Device 0.14 Technology
SMTC Semtech Corp 0.12 Technology
Figure 2. Stocks To Be Deleted From The Nasdaq 100 Index
Ticker Name Weight Sector
NOVL Novell Inc. 0.17 Technology
PALM Palm Inc. 0.13 Technology
LVLT Level 3 Communication 0.09 Utilities
RNWK Realnetworks Inc. 0.09 Technology
ARBA Ariba Inc. 0.08 Technology
CNET CNET Networks 0.08 Technology
COMS 3Com Corp. 0.08 Technology
BVSN Broadvision Inc. 0.06 Technology
CMGI CMGI Inc. 0.06 Technology
MFNX Metromedia Fiber Network 0.06 Technology
INKT Inktomi Corp. 0.05 Technology
MCLD Mcleodusa Inc. 0.04 Utilities
XOXO XO Communications 0.04 Business Services
>>>the weights for the entry candidates would 2.15 versus
>>>1.05 for the exit candidates. if anything, the new
>>>QQQ may be more tech volatility since the majority of
>>>replacements are related to biotech and the 3 non-tech
>>>entries, APOL, ESRX, and CHTR, will replace 3 similar
>>>non-tech stocks, MCLD, XOXO, and LVLT.
>>> |
