June 26, 2012
Every few weeks, the S&P 500 announces the addition of new companies to the index. These additions are announced as other S&P 500 member companies merge or shrink in size as they spin off operations or otherwise fail (think: Enron.
This week, S&P 500 announced the addition of Monster Beverage Corp., the maker of dozens of highly caffeinated drinks such as Protean, Monster Energy, Super Dry, and Hammer. (The ingredients for the latter include “nitrogenated coffee, concentrated skim milk, sugar, heavy cream, glucose, taurine, sodium citrate, and caffeine,” according to the can…) Interestingly, the Monster corporation had until January this year called itself “Hansen’s Natural Corporation,” after the company’s lineup of “natural” sodas. The company renamed itself Monster Beverage Corp. to reflect the popularity of the Monster Energy brand of drinks.
Monster is replacing Sara Lee Corp, the maker of Ball Park Franks, Jimmy Dean Sausage, and all sorts of different pastries (come to think of it, the sausage and pastries would go well with the Hammer…). The company, which will rename itself Hillshire Brands, is spinning off its international coffee and tea business, thus effectively reducing the size of the company. S&P has thus decided to demote it to the S&P MidCap 400 index, which for TSP investors would be part of the S Fund. In a sign of the speed of change among public corporations at times, there are already suggestions that Hillshire will be a takeover target in the coming months.
In another addition to the S&P 500, S&P separately announced that Seagate Technology will be added to the index, replacing Progress Energy. A long-time S&P 500 member company, Duke Energy Corp., is acquiring Progress Energy. (Happily for fans of rising dividends, Duke just announced today that it is raising its dividend by two percent. Not much, to be sure, but every little bit counts.)