Barely into its second week of trading, TheStreet.com E-commerce Index (symbol: ICX) is already being modified, with the swapping of three out of the 15 stocks that make up the new index.
The new index, which is listed on the American Stock Exchange, consists of a basket of stocks from fifteen companies described by Nasdaq-Amex as “actively-traded companies that generate all or a significant portion of their revenue from commerce conducted over the Internet.” The American Stock Exchange began trading options on the Index on February 17. Using options on ICX, investors can manage their exposure to these stocks.
The announcement did not give a specific reason for the change in lineup. Instead, Amex explained that “the substitutions announced today reflect the fact that this sector is evolving at a rapid pace.” Perhaps the industry is, indeed, expanding rapidly, but not to a degree requiring a manipulation of the stock Index in less than two weeks.
While the reassessment of companies represented in the Index is not, per se, very troublesome, the lack of a clear explanation as to the direction of the Index could, very well, raise red flags for investors.
In what appears to be a particularly vague statement, Clifford Weber, vice president of new product development at the Amex explained, “As a growing number of e-commerce companies become eligible for inclusion in the Index, we will continually evaluate the Index to ensure that it gives investors an up-to-date and accurate representation of the sector.”
Cyberian Outpost, Inc. (COOL)
Digital River, Inc. (DRIV)
uBid, Inc. (UBID)
Hollywood Entertainment Corp. (HLYW)
Micro Warehouse, Inc. (MWHS)
Barnes & Noble, Inc. (BKS)
This is the second announcement reported by the E-Commerce Times in the past six weeks regarding the establishment of an aggregate e-commerce stock investment option. On January 15, Chicago-based John Nuveen Company (NYSE: JNC) introduced its own e-commerce portfolio consisting of 35 e-commerce stocks.