The S&P 498?

As of the close of trading on Wednesday, Fannie Mae and Freddie Mac will be removed from the S&P 500 because their market capitalizations no longer meet the index’s $5-billion minimum.

After a disastrous three-months for both stocks, Freddie Mac (FRE) is worth roughly $550-million and Fannie Mae (FNM) is worth around $1.1-billion now that the U.S. government seized control of the nations largest mortgage finance companies.

Salesforce.com Inc.(CRM) and Fastenal Co. (FAST) will take their places after markets close on Friday, September 12. Until then, the S&P 500 will be the S&P 498.

The folks over at Bespoke Investment Group note that not only do Ciena Corp. (CIEN), Dillard’s Inc. (DDS) and MGIC Investment Corp. (MTG) all have market caps lower than Fannie Mae, but 119 companies fail to meet the $5-billion threshold for S&P 500 inclusion, which would make it the S&P 381.

Comments

[John C. Lee:]

Is there a potential list out there that may replace the 119?

2008 Sep 11 04:52 AM

[Ishortyou:]

are they going to the pink sheets?

2008 Sep 11 05:56 AM

[Sidj:]

I wouldn't be surprised if they just lower the $5-billion minimum in order to keep the index at 500. That's how the system works, just lower the standards if necessary to get the desired results.

2008 Sep 11 09:52 AM