Every quarter, S&P rebalances the ASX indices and that rebalance is due tomorrow week (June 6th). The main reason why stocks are withdrawn from the indices is because their market caps have fallen too low and they are replaced by better performing stocks with larger market caps. The following link shows the ASX 200 stocks with their market caps and Acrux with a market cap of $147m is sitting on its own at the bottom.
ASX 200 index
In fact the second lowest stock, Lynas, has improved considerably over the last week and now has a market cap of $333m so Acrux is way below all the other stocks and I think it is certain that it will be dropped out of the index.
Two weeks after the rebalance announcement (i.e. June 20th) the changes that are announced by S&P take place in the closing auction of the day. Those that are being removed from the index are sold out heavily by the index funds.
I think that this is the main reason why Motley Fools recent buy recommendation for Acrux has been pretty well ignored. Normally shareholders respond favourably to the Motley Fools tips.
Also because of the massive fall in Acrux's share price over the last year, it will be prone to heavy tax loss selling as we come to the end of the financial year.
Acrux does look like an interesting punt, but this is not the right time to do it.
GPASAS
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