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S&P500 listing and moderator actions (out of Market Action)

Discussion in 'TSLA Investor Discussions' started by AudubonB, Aug 12, 2018.

  1. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    Ugh.

    I just thought of a MonkeyWrench ex machina bizarre undesirednessmenthoodship, as follows (===>As per my MOD posts, ALL below are suppositions!<===)

    1. Time to deal-completion takes 2 quarters

    2. Those two quarters show nice profits

    3. Therefore, the last hurdle for S&P 500 inclusion is passed

    4. TSLA thus added to that gorilla of all Indices and enormous amounts of its shares need be purchased by such index funds

    .....

    And this at a time when the last thing the privatization path needs is for such a quickly-needed forced selling. Yuck.

    Sooooooo....has anyone been deep enough into the weeds to know if an entity can forcibly excuse itself from being entered into this (or other) Index? I’ll be surprised if any Index creator ever contemplated that outcome!
     
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  2. Artful Dodger

    Artful Dodger Please, call me "Lodger" Cheers!

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    #2 Artful Dodger, Aug 12, 2018
    Last edited by a moderator: Aug 12, 2018
    No, S&P eligibility requires four (4) succesive quarters showing profits. Might also get excluded on the "majority of shares in public hands" requirement.

    Requirements for S&P 500 listing:

    To qualify for the index, a company must have:
    • a market cap of $5.3 billion
    • its headquarters in the U.S.
    • the value of its market capitalization trade annually
    • at least a quarter-million of its shares trade in each of the previous six months
    • most of its shares in the public’s hands
    • at least half a year since its initial public offering
    • Four straight quarters of positive as-reported earnings.
    Moderator: If you’re going to be brazen enough to “Disagree” with a Moderator’s posting (true enough - It was not a “Mod” post), and try to ‘correct’ that post, then get your facts straight. And now....MOD ON: Read and HEED what I wrote about disseminating half-truths, mis-statements, old wives’ tales and daydreams....and posting them without mentioning this is your opinion only
     
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  3. MP3Mike

    MP3Mike Well-Known Member

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    This has been discussed repeatedly, and that information is incorrect. You need to go to the source to get real information: https://ca.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf

    Here are the main two differences:
     
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  4. schonelucht

    schonelucht Active Member

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    #4 schonelucht, Aug 13, 2018
    Last edited: Aug 13, 2018
    And again we have a moderator who feels that they can change someone else's post just because they disagree with the contents. I know it's a thankless job but THIS IS NOT THE WAY TO DO IT. And it's not like this is the first time either. If you disagree with the post, argue it as a non-mod through a reply. If there is a policy that half-truths are not allowed, delete the post (and get cracking because there are hunderds of them in the investor section, some of the most prolofic posters have a majority of their posts in this category).

    Btw, the mentality that someone must be 'brazen' to disagree with a poster that also happens to be a moderator disqualfies you as a moderator. It's that simple. You can be a poster AND a moderator at the same time but you need to STRICTLY seperate the two. Don't use powers that come from being moderator to 'win' an argument as a poster.

    Extra-ordinary times require extra-ordinary measures, so allow me to be so brazen to post some hard guidelines for our moderators.

    1. don't edit posts for content correction, only for policy. Even then, why not just delete it.
    2. if you put up a warning that you are going to be strict with off-topic posts for market action, then don't start posting off topics for market yourself
    3. if you put up a warning that you are going to delete/move certain discussions, DO IT
    4. for the love of god, expand your team.
    5. lock this thread on Saturday and Sunday
    6. public apology to a user who's post you edited
     
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  5. Artful Dodger

    Artful Dodger Please, call me "Lodger" Cheers!

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    Moderator: If you’re going to be brazen enough to “Disagree” with a Moderator’s posting (true enough - It was not a “Mod” post), and try to ‘correct’ that post, then get your facts straight. And now....MOD ON: Read and HEED what I wrote about disseminating half-truths, mis-statements, old wives’ tales and daydreams....and posting them without mentioning this is your opinion only

    This is not merely my opinion. It is a direct quote from a reputable source, for which I provided the link to Investopedia.com

    Requirements for S&P 500 listing:

    If you are attempting to educate users, your attitude is not helpful. It feels more like bullying. Apparently Investopedia isn't up to your standards either. Tell me if commenters are allowed to disagree in good faith, or if we need to know in advance what affect comments might have on MODS.

    BTW, you neglected to mention how much profit Tesla would need to earn in Q3 to become net profitable over the last 4 quarters. But since this is the "Market Action" thread, you can MOD this comment too.

    I will not return to this board without an apology.

    Good day.
     
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  6. Mike Smith

    Mike Smith Active Member

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    Sorry Artful Dodger, but you and Investipedia have it wrong. The requirement is profitability in both the most recent quarter and over the last four quarters, not four successive quarters.
     
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  7. mongo

    mongo Well-Known Member

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    As to what that means:
    Which says :
    @AudubonB
    @Artful Dodger Most internet sources get this wrong: actual fund documents attached for reference.

    The two rules related to profit are should be profitable last quarter and sum of last four quarter should be profitable (GAAP). Unless Q3 and Q4 really rock, they won't get positive for the year.

    S&P could add them at any time, but it seems like they would avoid doing so if the private transition were still in play (listing just to delist does not seem to be in their best interest)

    S&P methodology rules attached for reference
     

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  8. KarenRei

    KarenRei KarenRei KarenRei KarenRei KarenRei KarenRei

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    #8 KarenRei, Aug 13, 2018
    Last edited: Aug 13, 2018
    Okay, I haven't been part of this conversation (I've been sleeping). I don't even know what is being talked about. But I'm just going to say one thing:

    Threatening to moderate someone - even implicitly - because you disagree with them is totally not okay. "Brazen enough to disagree with a moderator"? You actually think that someone disagreeing with your views is a "brazen" act? Who do you think you are?

    Any mod who talks like this should be automatically disqualified from being a mod.
     
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  9. shootformoon

    shootformoon Member

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    Then there is no way S&P adds it 2019Q1 because FY2018 will be almost unprofitable for sure.
     
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  10. SW2Fiddler

    SW2Fiddler Ell Zee One, when the twins alit.

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    So, we all good now? We can watch Market Action?
     
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  11. neroden

    neroden Model S Owner and Frustrated Tesla Fan

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    S&P 500 inclusion is actually discretionary on the part of the committee. Even if the stock meets all the other criteria, if it's about to be taken private, the S&P committee will not add it.

    Problem solved.
     
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  12. mongo

    mongo Well-Known Member

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    From the doc:
    Eligibility criteria is a section of the same document and each item in eligibility is divided into total market and 1500 groups:
    Composite 1500 is made up of the 400, 500, and 600 as called out in Market Cap and
    Thus, there is no reason to have 1500 specific rules since the 1500 IS the 400,500, and 600 indexes, not a separate entity. Each market cap tier follows the same eligibility rules.
     
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  13. adiggs

    adiggs Active Member

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    Somewhat disconnected from the previous conversation, here's my own view on TSLA being added to S&P 500 (post copied from Market Action):

    You might not like it, but that's how the S&P 500 works. It's the creation of a private company, not a governmental entity, and they decide what's in and out. You and the market decide whether their criteria is useful to you in your investing decision making process. The government can't help (and isn't that the start of a meme - "hi, I'm from the government, and I'm here to help" :)).


    Anyway, my own view on things is that I LIKE that it's a committee decision. The way I look at it - if I were on the S&P 500 committee, and I want my index to be as relevant as possible to as big of an investor community as possible (and therefore we get licensing fees from funds tracking the index, or I assume that they do), then do I want TSLA to be in or out of the index?

    H'mm - I'm thinking IN. And I'm thinking I want to get TSLA into the index as soon as I can say they've met the criteria with a straight face and probably not hear laughter from the crowd.

    One profitable quarter is probably too soon. But if Q4 is bigly profitable and the sum of the previous 4 quarters is really close to break even, then I might lean on the "should" in the inclusion criteria, the fact that the trajectory is for big profitability in the quarters to come, and add TSLA as soon as Q4 earnings are announced.

    Or maybe I have to wait for Q1 '19 earnings are announced and TSLA is close or better than break even.

    In short - I think the S&P 500 wants TSLA in the index as soon as possible, and they're going to be interpreting the criteria as generously as they need to get it there. Love that "should".


    (To be clear, second paragraph on down is ALL MY OPINION. I've got no external evidence to suggest I'm right.)
     
  14. mongo

    mongo Well-Known Member

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    #14 mongo, Oct 31, 2018
    Last edited: Oct 31, 2018
    The S&P is no more the crown jewel that the 400 and 600 are. The only difference is the market cap of the companies. If the 500 had different rules, they would be part of the 1500 rules. Or the 400/600 would have different rules called out.

    As it is Twitter was added June 2018, pre Q2 results, previous GAAP earnings (in millions):

    2017
    Q2 -116
    Q3 -21
    Q4 91
    2018
    Q1 61

    Edit: total 15 million to the plus side
    tagging @vigleik @Ellec @shootformoon to move things out of MA
     
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  15. Fact Checking

    Fact Checking Active Member

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    That's pretty conclusive evidence, thanks!
     
  16. pz1975

    pz1975 Member

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    TWTR was announced to be joining S&P 500 on June 5 (join date June 7). For some perspective as what TSLA could do, here are stock closing prices for TWTR around those dates:

    June 4: 37.88
    June 5: 39.80
    June 6: 40.10
    June 7: 39.70
    June 8: 41.21
    June 11: 41.42
    June 12; 43.49
    June 13: 44.07
    June 14: 46.76

    Then it dipped slowly over the next 3 weeks to 43.89 on July 3.
     
  17. mongo

    mongo Well-Known Member

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    Humm... shift the decimal point... and...
     
  18. neroden

    neroden Model S Owner and Frustrated Tesla Fan

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    That's consistent with studies showing a ~10% boost from addition of a stock to the S&P 500.
     
  19. mongo

    mongo Well-Known Member

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    What was the short interest on TWTR at that time? It's 8% ish now...
     
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  20. Ellec

    Ellec Member

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    Nowhere near Tesla I would imagine. And I doubt twitter had a 2 year range with nuke level stops above the ATH.
     
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