Unlikely Names Join Russell Value Indexes

Every fourth Friday of June, the popular Russell indexes are reconstituted, shaking things up for traders and investors alike. πŸ“‹

Among this year’s rebalance, one of the most significant changes was the shift of Meta, Netflix, Paypal, and Zoom from the Russell 1000 Growth Index into the Russell 1000 Value Index. 🐌

These high-flying tech names have cooled significantly, with shares plummeting year-to-date and over the last year. πŸ₯Ά

As interest rates rose over the last year, companies like these faced a double whammy.

Higher interest rates made financing their growth more expensive, and it reduced the multiple that investors were willing to pay for their earnings. πŸ“‰

As a result, you saw their businesses slow and stock prices re-rated to the downside as investors moved the capital to more cyclical or “value” areas of the market like financials, industrials, materials, etc.

These stocks have been hammered and now have lower price-to-book and growth values, so they’ve met the index provider’s “value index” specifications. πŸ“Š

The last decade has been all about growth stocks, but value stocks have outperformed on a relative basis over the last year or so. Whether or not that continues remains to be seen, but this shakeup in index constituents is worth paying attention to.

You can read the full summary of this year’s reconstitution here. πŸ‘€

Elon Sells More $TSLA Pending Twitter Deal

As Elon Musk waits to close his deal to buy Twitter for $44 billion, the Tesla CEO just sold a whopping $8.5 billion worth of Tesla stock. πŸ’° πŸ’°

Musk sold 9.6 million shares of $TSLA stock, selling each share within the ranges of $822.68/share to $999.13/share. Analysts say the giant sale implies that Musk is trying to come up with more cash for the Twitter deal. Here’s a great graphic from the WSJ’s coverage of the story showing Elon’s financing for the $44 billion deal:

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An $APE-solutely Crushing Start

As planned, AMC Entertainment’s new preferred share class called “APE” units began trading today.

They were supposed to be distributed to investors’ accounts on Friday after the bell. Still, many had to wait until this morning…sparking a lot of weekend debate and conspiracy theories about what could be happening.

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