The Russell 3000 Project
The Russell indices are rebalanced every year to maintain appropriate sizing of companies into the correct size/style buckets. This annual reshuffling can create opportunities to buy companies whose stock prices are artificially driven down because of forced selling by index-tracking ETFs and the like.
This year the cutoff to remain in the Russell 3000 or Russell 2000 is a market cap of $257 million (there are a few larger-capitalization companies that got cut because they couldn’t maintain other requirements, like public float, domicile, etc.). The initial list was provided on June 4 and the final rebalancing date was June 25.
Here’s a nice graphic of the various indices and their cutoff points for 2021. You can see the floor created by starting from the top down, which creates the $257 million cutoff.
This project began a few months ago and culminated with a sortable spreadsheet with company names, descriptions, market caps, and some price data. Here’s a Google Sheet with data on the Healthcare and Financials segments. (Subscribers to the monthly paid version of Watchlist Investing have access to a full sortable Excel spreadsheet.)
As seen below, the list is heavily weighted toward Health Care and Financials, which together comprise two-thirds of the entire cut list.
The search for financials prompted this entire exercise. The stats for financials break down as follows:
Here are a couple of the companies that came out of the search:
Check out the paid version of Watchlist Investing, which features Deep Dives and Quick Looks into companies to help you be in a position to move quickly when Mr. Market overreacts and presents buying opportunities.
