Shares in Sears Holdings Corp. dropped 8 percent Thursday after news that it will be replaced on the iconic S&P; 500 by chemical company LyondellBasell Industries Sept. 4.
Shares closed at $52.92, losing $4.55, or 7.92 percent. They hit a low of $52.77 earlier in the session.
A drop in share price is typical when a company is removed from an index because fund managers have to sell that stock to ensure their holdings match the companies in the index.
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The Hoffman Estates-based retailer said Wednesday it was dropped because its public float — the number of shares held by public investors — has been “well below the 50 percent threshold for inclusion” for an “extended period of time,” said Standard & Poors, which operates the S&P; 500, in a statement.
Recent regulatory filings indicate that Sears Chairman Edward Lampert holds roughly 62 percent of the company.
“While we’re disappointed in Standard & Poor’s decision, we would point out that the action is rules based and solely a function of the public float of our shares, and not the valuation or performance of the company,” said Sears spokesman Chris Brathwaite in a statement.
“We would also highlight that S&P; recently boosted Sears Holdings’ credit ratings outlook to stable from negative, saying the company had improved its liquidity through our financial and operational discipline.”
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