PROVIDENCE – Two Rhode Island companies have made the list of publicly-traded firms tapped to join the Russell 3000, a stock market index that covers roughly 98 percent of the liquid U.S. equity market.
Providence-based Bancorp Rhode Island Inc. (Nasdaq: BARI) and Middletown-based satellite communications firm KVH Industries Inc. (Nasdaq: KVHI) are on the list of stocks that the widely-followed Russell 3000 plans to add when it completes its annual rebalancing on June 29.
But two other firms with local ties – The Providence Journal’s parent company, Dallas-based A.H. Belo Corp. (NYSE: AHC), and Richmond, Va.-based Media General Inc. (NYSE: MEG), owner of WJAR-TV (NBC 10) – have been targeted for deletion from the index because of their slumping market capitalization.
Russell’s preliminary list of changes, released on June 12, calls for 276 stocks to be added and 154 stocks to be deleted. The annual rebalancing list is based on a ranking of the market capitalization of publicly-traded firms on the final trading day in May.
In a sign of the toll the financial crisis has taken on equity markets, the total value of the Russell 3000 stocks’ market capitalization is down from $16.5 trillion in 2008 to $10.6 trillion this year, a 36 percent drop and the first time since 1997 that the index’s value has been less than $11 trillion, according to Forbes.
“Index reconstitution objectively captures the changing fortunes of companies and industries in the U.S. equity market,” Lori Richards, client service director for Russell Indexes, said in a statement. “The process reveals which sectors and states fared relatively well during the past year’s recession.”
The rebalancing process is important for companies, particularly smaller ones, because many fund managers and institutional investors use the Russell 3000 and its breakout indexes as a benchmark for their own holdings. Russell says $4.2 trillion worth of investments are tied to its indexes.
Tacoma, Wash.-based Russell Investments is a subsidiary of Milwaukee-based insurance giant Northwestern Mutual.
Bancorp Rhode Island’s stock was down 0.5 percent at $20.15 a share in trading this morning. The company’s market capitalization stood at $92.67 million.
KVH Industries’ stock was down 0.7 percent at $6.95 a share this morning, putting its market capitalization at $97.1 million.
