Fitness financials: Nautilus to be removed from S&P 600 index

Nautilus is scheduled to be replaced on the S&P 600 index, according to S&P Indices, which said the company is “no longer representative of the small cap market space.”
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Nautilus to be removed from S&P 600 index

Nautilus (NYSE: NLS) is scheduled to be replaced on the S&P 600 index, according to S&P Indices, which said the company is “no longer representative of the small cap market space.”

Nautilus was scheduled to be removed based on a drop in its value, while the stocks that will be added have risen since the announcement.

There are several research papers that show that stocks being removed from the S&P 600 tend to gain back some or all of price declines occurring between the announcement and the effective date, according to stock researcher Seeking Alpha. Vice versa, the stocks added to the S&P 600 tend to lose any price gains occurring between the announcement and the effective date, it added.

Seeking Alpha added that this anomaly is likely because the underlying fundamentals of a company do not change as a result of being added to or dropped from the S&P 600. When money following the S&P 600 is required to sell or buy, they create a temporary price deviation that can be taken advantage of, it said.

Nautilus has dropped over 10 percent since the announcement, and analysts expect the company to probably rise about 10 percent over the next two weeks to two months.

In other company news: Nautilus and HSBC Bank Nevada, National Association entered into a third amendment that effectively terminates all of the parties' executory obligations under the agreement.

Nautilus previously announced that it had entered into an agreement with GE Money Bank to provide consumer credit financing to its customers. That implementation was completed in September 2010.

--Compiled by Wendy Geister

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