Rumors that First Solar (NASDAQ:
), the largest U.S. solar firm, is once again a takeover target
have been predictably good for that stock as the shares are up
5.8 percent on above average turnover in midday trading.
The two solar
where First Solar makes a home are trading higher
after a rumor that First Solar
could be a target for General Electric hit trading desks earlier
While chatter of a First Solar takeover dates back to at least
2010, shares of the Guggenheim Solar ETF (NYSE:
) are up 2.34 percent on the rumor while the rival Market Vectors
Solar Energy ETF (NYSE:
) is up 2.51 percent.
which has $63.1 million in assets under
, has a weight of 8.74 percent to Arizona-based First Solar,
making that stock TAN's second-largest holding. First Solar is
KWT's third-largest holding at a weight of 8.14 percent. KWT has
$12.4 million in assets.
Arguably, today's bounce in First Solar, KWT and TAN could
prove to be a "buy the rumor, sell the news" event, particularly
because the news could wind up being no deal is imminent for
First Solar. This is not the first time GE has been rumored to be
a suitor for First Solar. That rumor initially sprang up in
Worth noting is that First Solar continues to live dangerously
with regards to its membership in the S&P 500. With a current
market capitalization of just over $2.8 billion, First Solar
is tied with five other stocks
for the lowest weight within the SPDR S&P 500 (NYSE:
Of that group of five, Apollo Group (NASDAQ:
), Advanced Micro Devices (NYSE:
) and Big Lots (NYSE:
) have smaller market caps than First Solar, implying there is
some buffer between the solar firm and possible expulsion from
the S&P 500.
While there has been no confirmation that First Solar will be
booted from the S&P 500 upon the next rebalancing of that
index, should that event take place, the stock and the
aforementioned ETFs will likely suffer. The reason being scores
of index funds that track the S&P 500 will have to sell First
Solar and replace it with the new additions to the index.
There are myriad candidates to replace First Solar in the
S&P 500, including Old Dominion Freight Line (NASDAQ:
) with a market cap of $3 billion. Sears Holding (NASDAQ:
) was expelled last year, but now has a market value north of $5
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