Dover Corporation’s (DOV) spinoff of Knowles is set for tomorrow and S&P recently announced the resulting changes to its indices. Dover will remain in the S&P 500, but post-spin, Knowles will ‘drop’ to the S&P Midcap 400 where it will replace Apollo Investment (AINV). Interestingly, Apollo is getting the boot due to S&P’s new methodology rules excluding business development companies from its US indices. Apparently, customers were ‘concerned with certain reporting requirements, expenses, and investment restrictions relating to business development companies (BDCs)’ so as a result, Apollo, which operates as a BDC, is getting the heave ho.
It’s worth looking out for forced selling any time an S&P 500 spinoff leaves the index, but given the popularity of recent spinoffs there is no guarantee any such selloff will occur. Knowles is expected to begin regular trading on March 3rd under the ticker ‘KN’ and Dover shareholders will receive one share of KN for every 2 shares of DOV owned.
Disclosure: Author holds no position in any stock mentioned.