Tuesday, June 3, 2008 0 comments ++[ CLICK TO COMMENT ]++

Ambac Kicked Out of S&P 500

Ambac is on the verge of getting kicked out of one index, Fortune 100, after becoming the smallest company in the Fortune 100 early this year. The Fortune 100 is based on revenue and Ambac had the lowest revenue at minus $4.18 billion last year (supposedly). Well, it lost its place among another prestigious index, the S&P 500. Ambac is slated to be removed from the index in a week.

Tobacco products producer Lorillard Inc. will replace Ambac Financial Group Inc. in the S&P 500 after the close of trading June 10, Standard & Poor's said Tuesday.

Ambac's market capitalization is about $860 million, ranking it 500 in the benchmark index, S&P said. The value of the bond insurer has plummeted during the past year over its exposure to mortgage debt. Its stock, which traded at $89.94 in May 2007, closed Tuesday down 2 cents at $3.

There will be some short-term selling pressure on the stock as passive indexers sell Ambac and buy Lorillard. However, Ambac will likely end up near the top of the pack in the S&P 400. It is also likely that Ambac will fall out of the radar of most of Wall Street given that many analysts cover the smaller companies to a lesser degree (it's not exactly small but more like mid-cap but still). Ambac had been part of the S&P 500 since 2000.


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