The Latest FTSE Reshuffle

Published in Investing on 16 March 2012

We take a look at the latest changes to the FTSE indices, and tell you what's in and what's out.

In the latest quarterly shake-up of the London indices, two energy-focused companies move down to the FTSE 250 to make way for newcomers.

Moving up

Making its debut into the FTSE 100 is Croda International (LSE: CRDA), whose share price shows a very pleasing upward slope over the past three months, peaking at 2,254p on Wednesday.

The Yorkshire-based company, which incorporates parts of the old ICI, is a global leader in speciality chemicals used in a wide range of products in areas such as healthcare, crop care, plastics and coatings.

Preliminary results in February showed earnings per share (eps) up more than 28%, and a dividend increased 57%. A recent article by James Early also identified the company as having exceptional return on capital.

Also making its debut is investment management group Aberdeen Asset Management (LSE: ADN), which has funds under management of £174 billion. It's a dramatic change in fortunes for the company that, 10 years ago, was on the brink of collapse following a scandal over the sale and management of some investment funds.

At that time the company was worth around £30 million, but it now enters the main index with a market capitalisation of £2.8 billion. Shares have risen roughly eight-fold over the same period, to the delight of many investors.

Moving down

This is the third time Cairn Energy (LSE: CNE) will be outside the FTSE 100, having joined it originally in September 2004, and most recently in December 2007.

The oil and gas explorer has assets in Greenland, Spain, Nepal and Albania; it also retains a 22% interest in Cairn India, which it says has the potential to account for more than 30% of India’s oil production, following the sale of a controlling stake to Vedanta (LSE: VED).

There will be some interest in the shares at the current price of 327p, as Greenlight Capital, the hedge fund controlled by David Einhorn, disclosed a holding in the company on Monday.

Also demoted is Essar Energy (LSE: ESSR). Spun off from the Mumbai-based conglomerate Essar Group, both Essar Energy and the parent company are controlled by the Ruia family, one of India's richest. The company's business comprises two divisions: power generation and transmission; and oil and gas exploration, production, refining and marketing.

Its listing on the main London stock market in May 2010 raised £1.2bn, the largest fund-raising the market had seen since the turmoil of 2008. From its initial price of 420p, it joined the FTSE 100 the following month at 442p, and by December of that year had peaked at 590p. Since then it has been a long and mostly steady decline to the current price of 118p, with concerns about funding and the availability of coal.

I say mostly steady decline, as a 27% one-day drop in February, following an unfavourable judgment by the Indian Supreme Court in a tax dispute, will have caused some pain to investors. Cliff D'Arcy has described this as "the FTSE 100's worst ever flotation".

The changes will take effect from the start of trading on Monday 19 March.

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Comments

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UncleEbenezer 16 Mar 2012 , 7:35pm

So that's movement in/out of the 100.

Doesn't the Fool usually also tell us what's in/out of the bottom of the 250?

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