What happened
Investors rarely like it when one of their stocks gets tossed from an important index. That was a key factor in the sell-off of Hawaiian Holdings(NASDAQ: HA) shares on Monday. The airline's price declined like a big plane coming in fast for a landing, tumbling by nearly 9% on a day when the S&P 500 index basically traded flat.
So what
Last last week, S&P Dow Jones Indices (the operator of the closely followed S&P indexes) made a set of changes to three of its lineups, which started to kick in before market open today.
The one affecting Hawaiian is the S&P SmallCap 600 index, of which it was a component. The airline's stock is being replaced by that of struggling retailer Kohl's, which was bumped down from its former position on the S&P MidCap 400. It didn't help that, in S&P Dow Jones Indices' boilerplate language, Hawaiian "is no longer representative of the small-cap space."
The company did have a decent run on the index. It was tapped in May 2015 to be a component, displacing the regional lender now known as Bank OZK when the latter was bumped to the S&P MidCap 400 index.
Now what
Hawaiian Holdings hasn't made any official statement about its departure from the SmallCap 600. While the move shouldn't affect its fundamentals in any way, it is a psychological blow and will push it off the radar of the many index funds that target such listings for their portfolios.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Hawaiian Holdings. The Motley Fool has a disclosure policy.
