SCO Added to "New Russell Microcap Index" (Groklaw) [LWN.net]

Groklaw does some digging into SCO's recent addition to the New Russell Microcap Index. ""If you're a busy person and don't want to play around with your investments, Russell offers opportunities to get the type of solid investment program that some of the world's largest, most sophisticated investors use. We bring together some of the world's best money managers to meet our clients' needs. We do this through industry-leading money manager research used by corporate investors like AT&T, Boeing, United Airlines, and organizations like the Bill & Melinda Gates Foundation." Well, well. What do you know? Look who just showed up. Mr. Gates. Purely coincidentally, I'm sure."

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SCO Added to "New Russell Microcap Index" (Groklaw)

Posted Jul 21, 2005 19:54 UTC (Thu) by mattdm (subscriber, #18) [Link]

As much as I respect Groklaw, I think this particular digging is misguided. (As is SCO's crowing press release, but that's to be expected.) The sole factor for inclusion in this index is market capitalization. It's not an indication of anything -- positive or negative -- about the company itself. Specifically, according to the link in the press release, it means that as of May 31st, their market capitalization (at that time, around $74 million) put them somewhere in the range of 2001st- to 4000th-sized US commmon stocks.

And since the median stock in the index has a market cap of $175.8 million, that puts them somewhere in bottom half of that list -- really not all that much of a bragging claim. Well, it is a wonder that given the recent smoking-gun memo disclosure they're not completely off the bottom of the chart.

SCO Added to "New Russell Microcap Index" (Groklaw)

Posted Jul 21, 2005 21:58 UTC (Thu) by stumbles (guest, #8796) [Link]

I think the point trying to be made at Groklaw is this; there are many many
other companies of similar size, market cap, etc that would seem to fill that
particular Index much better than TSCG.

I personally find it curious they were picked over other companies that have not
pissed off their market sector, threaten to sue and have sued their customers
(so far they have lost that type of case) over highly questionable issues and
generally made a complete ass of themselves on many other levels. And I
haven't even started to question the quality of their product.

So I do not think PJ's thoughts are misguided. One does have to wonder why
when this company sits on the edge of the dumpster waiting for the slightest
gust of wind to topple it over what was the real merits behind their addition.

SCO Added to "New Russell Microcap Index" (Groklaw)

Posted Jul 21, 2005 23:22 UTC (Thu) by danm628 (subscriber, #5995) [Link]

Actually Russell didn't skip over other companies. Russell has a formula (links are in Russell's press release), if a company matches the formula they are in the list. In this case the formula is "is the company one of the smallest public companies in the US". So all being in the index means is that SCOX is one of the smallest public companies. Since this is an index and not an index fund there is no investment tied to being in or out of the list (at least for now).

Russell probably created this as a way for people to compare the general microcap market to more specific indexes and index funds (i.e. compare "Microcap Index" to "Microcap good company that will make money because we think they are smart"). In order to tell if your funds do well you need to know what the average is. SCOX will help lower the average performance but as long as they continue to exist they will probably qualify for this index.

I like PJ and Groklaw. I read it several times a day. She's very smart. She's also not an investment guru; neither an I, but I do own enough stocks/funds to know a little bit about the market. If Russell had created the "Microcap Index of companies about to make billions" and put SCOX in it then I'd believe something was going on. But creating a formula based index that includes SCOX and 1999 other companies doesn't mean much.

While all roads may lead to Rome, not all money leads to Microsoft.