Massive Russell 1000 Index Reconstitution Means Huge Buying in 5 Stocks

Investing

Published: June 24, 2015 9:10 am

This Friday on the market close, Russell will fully reconstruct its U.S. Index series. This means the Russell 2000, The Russell 1000 and the Russell Multiple Shares Class indexes will all see very heavy trading volume. In fact, the Credit Suisse analytical team estimates a gigantic $54 billion in two-way trading to hit the tape on the close.

The reconstitution accounts for additions and deletions to all the indexes and also reweighting within the indexes. In an odd twist, sometimes the stocks deleted from the Russell 2000 outperform a basket of companies that are added to the index. It is the reverse in the Russell 1000, as the additions to the index outperform the deletions.

We screened the Credit Suisse research for the five top additions to the Russell 1000 this year. While the stocks that are going to be added are well known in advance, and people do tend to front-run the buys, there will still be a ton of action on the close Friday.

Delphi Automotive PLC (NYSE: DLPH) is a leader in the automotive original equipment manufacturing segment and will be added to the Russell 1000. The Credit Suisse team estimates that a total of 9.455 million shares will be bought at an estimated value of a gigantic $828 million. That is a massive 465% increase in the average 10-day trading volume. Delphi shares closed Tuesday at $88.54.

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Comcast Corp. (NYSE: CMCSA) will be added Friday, and it is a top entertainment stock that will makes its debut. An estimated 10.177 million shares of the giant cable provider will be bought at a total value of $588 million. That is a whopping 314% increase in the average 10-day trading volume. Shares closed Tuesday at $60.51.

Twenty-First Century Fox Inc. (NASDAQ: FOXA) is another well-known entertainment company being added to the Russell 1000. An estimated 12.876 million shares of the stock will be bought at a total value of approximately $420 million. This will represent a 307% increase in the 10-day average trading volume. The stock closed on Tuesday at $33.06.

Weatherford International Ltd. (NYSE: WFT) is a top oil services company that has been cut almost 50% since the highs the stock printed last summer. Regardless, it becomes a Russell 1000 member on Friday. An estimated 25.665 million shares of the stock will be purchased at at total value of right at $350 million. That is a 283% increase in the 10-day average volume. Weatherford closed Tuesday at $13.35.

Lululemon Athletica Inc. (NASDAQ: LULU) is the hugely popular yoga apparel retailer and it will be added to the index as well. An estimated 3.924 million shares of the stock will be bought at a total value of $261 million. That figure is right at the average 10-day trading volume for the stock, as it is a highly traded momentum favorite. Shares closed on Tuesday at $68.80.

Again, these are hardly any big secret, but for anybody looking to sell shares of any of these companies, a market-on-close order Friday could be just the ticket.

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