General Motors Co. is rejoining the Standard & Poor's 500 Index on June 6, 2013, replacing H.J. Heinz Co, according to a statement by S&P Dow Jones Indices LLC. GM’s return to the S&P 500, a benchmark gauge for American equities, came four years after it was kicked out from the index due to its much-publicized financial collapse.
H.J. Heinz will be acquired by Berkshire Hathaway Inc. and 3G Capital in a $23 billion buyout. GM had been in the S&P 500 since the index was established in 1957 but was kicked out in 2009. The carmaker would be the 79th biggest company in the index, based on closing market values on June 3, 2013.
Daniel Genter, president of RNC Genter Capital Management, told Bloomberg in a phone interview that GM is in essence getting vote of confidence from S&P. He remarked that S&P expects that GM will have significant longevity and growth – reasons why it should be added back into the “business mix of America."
GM return to the S&P 500 is considered as a milestone for the company as investor optimism surges back since it underwent bankruptcy reorganization and received a $49.5-billion bailout from the U.S. government.
The US Treasury is disposing its stake at the carmaker, which stock surpassed the $33 IPO share price on May 17, 2013, for the first time in two years. GM shares closed on June 3, 2013 at $34.96. GM’s return to the S&P 500 may prompt money managers to shift holdings to match the index. According to S&P's Web site, around $5.58 trillion is benchmarked to the index. [source: automotive news - sub. required]