What's in and what's out in the latest FTSE reshuffle.
It's one of those familiar things that we can all remember having around for, well, as long as we can remember, but when was the last time you actually opened a Yellow Pages?
Admittedly there's more to the directory's owners, Yell (LSE: YELL), than a paper-based doorstop -- there's also its Yell.com website and its 188 24 7 directory inquiries service, which was recently awarded the prize for 'Best UK Service' for the fifth year at the 118 Awards. Which I'm sure is an achievement, but I'm still more likely to use Google.
But regardless of how well it performs operationally, a major problem for Yell remains its debt, something that Cliff D'Arcy warned Motley Fool readers about six months ago. At the end of September, the company had net debt of £2.9bn, ten times its current market capitalisation of £286m.
Since Cliff's warning in May, Yell's shares have fallen another 67%, and have finally been booted out of the FTSE 250 mid-cap index in this week's quarterly re-shuffle. It's an embarrassing development for the BT (LSE: BT-A) spin-off, which went straight into the FTSE 100 following its flotation (via venture capital) in 2003, and was demoted to the FTSE 250 in March 2008.
At Thursday's closing price of 12.2p, original shareholders are now down 96% on their 285p issue price, while anyone buying at the 640p peak in 2007 has fared even worse. The VCs, by the way, doubled their money on the flotation.
The big league
Looking to the FTSE 100, the latest round of quarterly revisions sees just one change to the line-up, with defence group Cobham (LSE: COB) dropping to the FTSE 250 to make way for engineer IMI (LSE: IMI).
Contrary to popular belief, the FTSE 100 is not strictly the largest 100 companies on the market; to gain entry, the company must be in the top 90, and to drop out it must fall below 110th position. This is intended to give a little more continuity to the group than a pure top 100.
Cobham joined the FTSE in March 2008 at more-or-less the same price at which it now drops out. Dating back to a pioneer of air-to-air refueling in the 1930s, the company is still a leader in that market today, while also providing avionics products, law enforcement and national security 'solutions', and satellite communication equipment.
It falls to the mid-caps despite rumours of a possible takeover bid from a defence giant such as BAE Systems (LSE: BA), America's Northrop Grumman, or Italy's Finmeccanica.
Taking its place in the FTSE 100, IMI is another engineer but with an even older heritage, tracing its history back to a Victorian-era ammunition manufacturing company, at one time part of Nobel Industries. It now specialises in niches such as indoor climate control, beverage dispensers, and valves for industries like power generation and petroleum production.
Gamblers' blues
A business perhaps better known to investors and gamblers is Betfair (LSE: BET), the 'betting exchange' which allows gamblers to make and take bets at market-determined odds.
The company joined the stock exchange in October, and with a market capitalisation of £1.3bn is easily entitled to a place in the FTSE 250. Despite rising from 1300p to 1610p, the shares have since fallen back to 1240p.
The full list of changes to the FTSE 100 and FTSE 250:
Inclusions to the
FTSE 100 Index | Exclusions from the
FTSE 100 Index |
|---|
| IMI | Cobham |
Inclusions to the
FTSE 250 Index | Exclusions from the
FTSE 250 Index |
|---|
Cobham (exclusion from FTSE 100)
Betfair (new entry)
AZ Electronic Materials
(LSE: AZEM) (new entry)
London & Stamford Property
(LSE: LSP) (new entry)
Exillon Energy (LSE: EXI)
(promotion from Small Cap) | IMI (promotion to
FTSE 100)
Robert Wiseman Dairies
(LSE: RWD)
Xchanging (LSE: XCH)
Melrose Resources
(LSE: MRS)
Yell |
The changes will take effect from the start of trading on 20 December.
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