S&P Dow Jones Indices announced late Friday that it is adding four stocks to the S&P/TSX Composite Index, the broadest measure of the Canadian market.
No changes are being made to the S&P/TSX 60, a selection of most of the largest companies in the composite.
S&P said it will add mining companies Aya Gold and Silver Inc. AYA-T, CES Energy Solutions Corp. CEU-T and Calibre Mining Corp. CXB-T in addition to bus-making company NFI Group Inc. NFI-T.
Aya Gold and Silver is a Quebec-based silver producer with an underground mine located in Morocco alongside other exploration properties on the South-Atlas Fault. At its $13.98 close on Friday, it’s grown 32 per cent since hitting $10.03 last December. 2023 revenue was $42.85-million.
CES Energy Solutions is a provider of chemical solutions to the North American oil and natural gas industry. At its $6.85 close Friday, it’s more than doubled over the past six months from $3.35 in December. In May CES published record revenues of $588.6-million, which increased 6 per cent year over year.
Vancouver-based Calibre Mining Corp is a gold mining company with operations in Newfoundland and Labrador, Nevada and Nicaragua. As recently as October 2019, Calibre had a market capitalization of $26-million, with fewer than $50 million shares outstanding. Today, after two recent acquisitions, it has nearly 800-million shares outstanding, and its Friday closing price of $1.79 gives it a market value of more than $1.4-billion.
NFI Group is a global provider of busses and motor coaches. Their battery-electric vehicles are in 150 cities across six countries. Its share price took off in last month, climbing from $11.28 to its Friday close of $16.35. At the end of April the city of Boston ordered 80 buses from a NFI subsidiary, with options to purchase an additional 380 buses. First quarter revenue of $723-million was up 42 per cent year over year.
No stocks will be deleted from the composite.
The changes will be effective at the open of markets on June 24.
S&P Dow Jones uses “float” – the value of shares that aren’t held by insiders and that therefore trade frequently and are easily available to the public – to judge whether a company should be included in its indexes. The index provider does not release its proprietary float calculations.
To get into the composite, a company’s float-adjusted market capitalization must be 0.04 per cent, or four-hundredths of a percentage point, of the total value of the index. To stay in the composite, a company’s float must not drop below 0.025 per cent, or 2.5 hundredths of a percentage point, of the total value of the index.
With the growth of index funds and other passive investing strategies, whether a stock is part of a major index can have a meaningful effect on share prices. Fund managers who track an index need to hold shares in the underlying companies. Canadian stocks added to the composite – which has about 220 to 250 members, depending on the quarter – can see price bumps before and after inclusion. Similarly, companies removed from the index lose a source of demand for their shares.
Research by Morningstar Direct for The Globe and Mail found Canadian mutual funds and exchange-traded funds with assets under management amounting to $395-billion had returns that were 95 per cent or more correlated with the S&P/TSX Composite over the 12 months ended Dec. 31, 2023. This included funds that explicitly say they track the index.
Analysts at ATB Securities Inc. who track the additions and deletions for their clients estimate index-related demand accounts for an average of 5.5 per cent of the float of an S&P/TSX Composite member company.