Shares of the wealth management company Envestnet (NYSE:ENV) traded more than 11% higher as of 1:40 p.m. EDT after it was announced that the company will soon join the S&P MidCap 400 Index.
The S&P MidCap 400 Index is composed of a wide range of publicly traded U.S. mid-cap stocks with a market capitalization ranging from $3.2 billion to $9.8 billion. Envestnet currently has a market cap around $4.35 billion.
The company is replacing regional bank TCF Financial Corp. in the index. TCF is being acquired by another larger regional bank, Huntington Bancshares, in a deal that will soon be completed.
Stocks tend to appreciate when they are added to an index because funds that track that index must now buy the stock. Also, being added to an index results in greater visibility for the stock.
Envestnet reported a nearly $15 million profit in the first quarter of the year, up from a $7.2 million loss in the first quarter of 2020.
"During the first quarter Envestnet again delivered strong financial results, exceeding our revenue, adjusted EBITDA, and adjusted EPS expectations," CEO Bill Crager said in a statement.
The company looks to be executing on strategies that will enable it to grow fast, putting it in good shape to deliver solid results for the rest of the year.