Index Change Roundup – Post Honeywell, Air Products, R.R. Donnelley and Cousins Properties Spinoffs

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You may have noticed a lull in our regular programming and for that we apologize. Over the past few weeks, a number of spinoff transactions have closed leading to quite a few shifts within the S&P indices. Here is a summary of the various transactions:

  1. Honeywell’s (HON) AdvanSix (ASIX) spinoff was distributed on October 1st and the new company joined the S&P SmallCap 600 Index, replacing Universal Technical Institute (UTI – talk about an awful ticker!!!). Honeywell, the parent company, remains in the S&P 100 and S&P 500 indices.
  2. Air Products and Chemicals (APD) spinoff of Versum Materials (VSM) was effective on October 1st. Versum is now a member of the S&P 400 MidCap Index while Air Products remains in the S&P 500 Index. As a result of these changes, Abercrombie & Fitch (ANF) was booted to the S&P 600 SmallCap Index and Basic Energy Services (BAS) was kicked out of the S&P 600 SmallCap.
  3. R.R. Donnelley and Sons (RRD) completed its restructuring by spinning off two companies – LSC Communications (LKSD) and Donnelley Financial Services (DFIN) on October 1st. All three companies (to be clear that includes the parent) were added to the S&P 600 SmallCap Index. The parent company used to part of the S&P 400 MidCap Index. This obviously led to a series of corresponding moves including Sizmek Inc, Bonanza Creek Energy (BCEI) and Gulfmark Offshore (GLF) getting tossed from the SmallCap index and the promotion of Sally Beauty Holdings (SBH) to the MidCap Index. Sizmek was acquired by Vector Capital.
  4. Cousins Properties (CUZ) completed its acquisition of Parkway Properties on October 6th. The very next day, the newly combined entity spun off Parkway Inc (PKY), its Houston focused REIT, which joined the S&P 600 SmallCap Index. The new company replaced Voxx International (VOXX), which is now homeless in the S&P Indices. As a result of the acquisition, Cousins was bumped up from the SmallCap Index to the S&P 400 MidCap Index, replacing Community Health Systems (CYH).

Longtime spinoff investors know that it’s always worth watching index moves for potential forced selling and attractive entry points. One interesting note here is the clear pain in the energy patch – most of the companies booted for being at the bottom of the index were in the energy sector.

We will do our best to catch up on what we have missed and continue the efforts going forward.

Disclosure: Author holds no position in any stock mentioned.