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Apple to lose weighting in Russell index, shares could fall

“After dropping more than $200 billion in market capitalization in one year, Apple shares could fall further as they are set to lose their weighting and be reclassified in the annual reconstitution of the widely followed Russell indexes,” Rodrigo Campos reports for Reuters. “When all is said and done, about $1.3 billion more will be sold in Apple Inc shares at the market close on Friday, when the reconstitution of the Russell indexes takes effect, according to an analysis by Credit Suisse.”

“Because Apple has been aggressively buying back and retiring its stock, outstanding shares have dropped to less than 5.5 billion from 5.8 billion in late June 2015, when the Russell indexes were last recalibrated, according to Reuters data,” Campos reports. “Apple’s weighting in the Russell 1000 will roughly fall to 2.52 percent from 2.77 percent, Credit Suisse said. The decline is due to the combination of fewer shares outstanding and Apple’s smaller part of the index’s capitalization.”

“With the changes, fund managers who are pegged to the index, including exchange-traded funds, will have to sell the stock to match the new, lower weighting,” Campos reports. “Adding to the selling pressure, Apple will be classified as both a value and a growth company at Russell. After the close on Friday, 92 percent of Apple will be considered ‘growth’ and 8 percent ‘value’ according to index provider FTSE Russell, splitting it between two Russell subindexes. The move matters because value managers that peg their investments to the Russell indexes will be buying Apple while growth managers will be selling.”

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MacDailyNews Take: Growth is not over at Apple.

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