To: russwinter who wrote (28407 ) 3/11/2005 1:31:39 PM From: ild Read Replies (1) | Respond to of 110194 When It's Time to Change, You've Got to Rearrange Bernie Schaeffer 3/9/2005 8:57 AM ET Equity investors are on the eve of quite a notable change in the way Standard & Poor's comprises its U.S. stock indices. At the present time, equities within all S&P indices (including the widely-followed S&P 500 Index) are weighed according to their market capitalization, or the number of outstanding shares multiplied by the shares' current price. In an effort to divvy things up a bit more fairly, S&P is instituting a gradual shift from this weighting classification to a "free-float weighted" basis. A stock's float is defined as the number of shares outstanding that are available for public trading (i.e., not held by insiders, who are historically unlikely to unload their shares). On March 18 (next Friday), S&P indices will be arranged on a half market-cap, half float-weighted basis. The shift will conclude on September 16, when float-weighting takes over entirely. The effects of such moves are as follows: some stocks, which have a sizeable portion of their cap held by insiders, may see their SPX rankings fall, while other stocks, with market floats that are nearly equal to their total cap, could move higher on the SPX roster. As such, the days around March 18 and September 16 could endure unusual buying and selling activity, resulting in rocky trading. In short, stocks losing ground in the index could face selling pressure, while equities that increase their respective weightings may attract some additional buying power. The first table below lists the 40 stocks that will see the largest upward move within the SPX, thanks to the adjustment. The difference was derived by taking the stock's original SPX ranking (derived by market cap) and subtracting this from its new ranking (calculated by a formula that averages the stock's market cap with its "float cap," or the float times the stock's current price). For example, UST Inc. (UST: sentiment, chart, options) ranks at number 287 in the current index. Once the stock's float is figured into the mix, accounting for half of the formula, UST will rank number 273, an advance of 14 slots. More at the link (subscription required)schaeffersresearch.com