85.7 F
San Fernando
Thursday, Jun 1, 2023

Russell Index Means Visibility for Cinedigm

Sherman Oaks-based entertainment distributor Cinedigm Corp. is now listed on the Russell Microcap Index, one of the U.S. indices offered by London Stock Exchange Group-owned index provider FTSE Russell. The company announced the development June 11. A presence on the index caps a series of operational wins for the company, which manages a library of independent movies, television shows and short-form videos. The company signed a distribution deal earlier this year with Insurrection Entertainment and has scaled up its streaming “over-the-top” channels on consumer devices, such as Vizio Inc.’s Smartcast platform. The company announced in April that it would launch an over-the-top channel that will stream content from China. “Inclusion in the Russell Microcap Index underscores the progress we are making to increase shareholder value by expanding the distribution of premium entertainment content and streaming (over-the-top) channels globally,” Chris McGurk, chief executive, said in a statement. The Russell Microcap Index tracks the performance of up to 2,000 companies, including the 1,000 smallest firms on the Russell 2000 plus up to 1,000 more small firms that have stock listings on the New York Stock Exchange or the Nasdaq. It does not include over-the-counter or “pink sheet” stocks. Whether a company is suited for membership is determined based on market capitalization rankings and key financial figures, according to Russell. Unlike joining the S&P Small Cap 600, which requires that companies show four consecutive quarters of positive earnings, a listing on the Russell Microcap is not necessarily an indication of financial viability. However, inclusion on any index can benefit a company, noted Scott Hood, chief executive and portfolio manager at boutique investment firm First Wilshire Securities in Pasadena. “Since investors are increasingly using index funds rather than active stock selection, inclusion in an index means those index funds will be forced to buy the stock, helping raise the stock price,” Hood said. It could also increase the company’s exposure to investors, he added. Firms like Hood’s see particular value in the small companies that are listed on the Russell Microcap, as their potential often has not yet been realized by investors, he explained. “We believe these stocks are a better pond to fish in for opportunities versus the larger half of the Russell 2000,” Hood said. Since joining the index, shares of Cinedigm have gained 4.7 percent. Shares closed June 20 at $1.55. For Cinedigm, which has 34.9 million shares outstanding trading at under $2 each, greater exposure will likely benefit its stock price in the short-term, though the long-term implications are less clear. Companies that are added to a high-profile equity index tend to enjoy price bumps for the first 45 days on account of institutional investors rebalancing their portfolios, according to a report from McKinsey & Co. After that, returns tend to normalize, the report said.

Featured Articles

Related Articles