A slew of companies are primed to join the S & P 500 in the near future, and Bank of America thinks their shares could get a boost from it. The bank expects KKR could be the next investment management firm to join the S & P 500 over the six months following the addition of Blackstone to the index last year. KKR, which has a roughly $78 billion market cap, is the next largest alternative asset manager after Blackstone, which is valued at about $146 billion. "We continue to believe that KKR will be the next Alt added to the S & P 500 Index following BX's September 2023 add," wrote Craig Siegenthaler, who covers brokers, asset managers and exchanges for the firm. Afterward, the analyst expects Apollo Global Management, worth $58 billion, and Ares Management , a $38 billion company, will be the next wealth managers to be added to the index. KKR 1D mountain KKR However, the candidate most likely to get added to the S & P 500 next is enterprise software company Workday , as the index is more underweight tech than it is financials, the analyst said. Workday is valued at about $76 billion. An addition to the S & P 500 is likely to drive up the prices of each of the stocks. The analyst noted the inflows from passive ETFs alone, into what is the "most replicated index in the world," will bolster stock prices. "The ETFs and index funds benchmarked to the S & P 500 currently own 17% of the float of its constituent companies on average (requires 12% net buying for KKR and APO when added as they are removed from other S & P indexes)," Siegenthaler wrote. "Passive ETFs benchmarked to the S & P 500 are growing and getting inflows which will help support the share prices of the stocks in the index," Siegenthaler added. For KKR, the analyst has a $109 price objective, implying 23% upside from Monday's close.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.