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Stillwater Mining pops on addition to Index

posted on December 11, 2012 at 5:49 pm
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Why the pop–7.24%–in shares of Stillwater Mining (SWC) today? The stock, a member of my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/  , will be added to the Standard & Poor’s Small Cap 600 stock index after the close on December 13, Standard & Poor’s announced before the New York markets opened today. (Stillwater Mining will replace JDA Software Group (JDAS) in the index.)

When a stock gets added to an index, index fund managers—in this case managers of funds that track the S&P Small Cap 600 index—have to add shares of that company to their holdings to keep their portfolio aligned with the index. That can—and apparently has in this case—provide a substantial boost to a stock. Stillwater has a market capitalization of just $1.4 billion with only 117 million shares outstanding. In comparison a single small cap ETF, the Vanguard Small Cap ETF (VB) has total assets of $4.5 billion.

I have a $15 a share target price on this stock.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Stillwater Mining as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/

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