Apollo, the big alternative asset-management company and insurer, is now the largest U.S. company in terms of market value that isn’t in the
Apollo’s market capitalization is $64 billion.
KKR and CrowdStrike, with market capitalizations of more than $80 billion, had been the top two U.S. companies by market value not in the index until S&P Dow Jones Indices said Friday that they and GoDaddy will be added before the start of trading on June 24. The three companies will replace
Comerica
,
Robert Half, and
Illumina
.
Comerica and Robert Half have market capitalizations of just $6 billion, while Ilumina’s is $18 billion.
S&P Dow Jones Indices doesn’t automatically add the largest companies not in the index when it makes additions, but it generally gets around to putting those stocks into the S&P 500. Big market-cap companies that have been added in the past year include Uber Technologies, Airbnb, and Blackstone.
Potential additions to the S&P 500 include Apollo, Palantir, Coinbase, Ares Management, Workday, Snowflake, DoorDash, and TradeDesk. They all have market values of at least $40 billion, which puts them well above the minimum of $12.7 billion required for inclusion.
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Being in the S&P 500 index isn’t only prestigious, inclusion can also lead to a higher stock price due to purchases by index funds. On Monday morning, KKR stock was up 8.9% to $106.73 while CrowdStrike rose 8.3% to $378.11 and GoDaddy was 2.3% higher at $142.58. Investors may be buying the stocks before funds tracking the indexes acquire the shares around the time the stocks join the S&P 500 later this month.
Neither KKR nor CrowdStrike was in the S&P 400 MidCap index before Friday’s news.
S&P Dow Jones Indices has several criteria for entry into the S&P 500 beside size. Only U.S. companies are eligible and they need to be profitable under generally accepted accounting principles for four quarters based on the sum of their profits over that span, as well as being GAAP profitable in the most recent quarter. The profitability test can trip up some large technology companies that aren’t profitable for four quarters based on GAAP earnings.
Master limited partnerships and business development companies aren’t eligible for inclusion. That nixes the gigantic pipeline company
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which is a master limited partnership.
Write to Andrew Bary at andrew.bary@barrons.com
