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Bombardier Inc. is returning to Canada’s primary stock index after a year when its shrunken value made it too small for inclusion.

S&P Dow Jones Indices, manager of the S&P/TSX Composite Index, said Bombardier and seven other companies will join prior to the open of trading on Sept. 20.

Bombardier will be joined by Birchcliff Energy Ltd. ; Converge Technology Solutions Corp. ; cloud-computing company Docebo Inc. ; K92 Mining Inc. ; MTY Food Group Inc. ; Telus International (Cda) Inc. ; and Well Health Technologies Corp.

Trillium Therapeutics Inc., which has agreed to be acquired by Pfizer Inc., will be deleted from the index.

S&P Dow Jones Indices cut Bombardier from both the Composite and the S&P/TSX 60 in June, 2020, after its stock price struggled to remain above $1. The stock fell about 75 per cent over the first half of that year.

The stock is now pushing $2 – more than doubling – and has a market capitalization of more than $4.6-billion.

That means it remains too small for the S&P/TSX 60, an index of select larger-capitalization stocks. Dow Jones Indices uses “float” – the value of shares that aren’t held by insiders and therefore trade frequently and are easily available to the public – to judge whether a company should be included in its indexes.

Most members of the S&P/TSX 60 have a float capitalization above $10-billion, according to data from S&P Global Market Intelligence, while Bombardier’s is about $4-billion.

No changes are planned for the S&P/TSX 60 this month, S&P Dow Jones said.

With the growth of index funds and other passive-investing strategies, whether a stock is part of a major index can have a meaningful effect on share prices. Fund managers who track an index need to hold shares in the companies. The stocks can see a price bump before and even after inclusion. Similarly, companies removed from the index lose a source of demand for their shares.

Research by Morningstar Direct for The Globe and Mail found Canadian mutual funds and exchange-traded funds with assets under management totalling $234-billion had returns that were 95 per cent or more correlated with the S&P/TSX Composite over the 12 months ended June 30. This included funds that explicitly say they track the index.

To get into the Composite, a company’s float-adjusted market capitalization must be 0.04 per cent, or four-hundredths of a percentage point, of the total value of the index. Also, companies must be listed on the TSX for at least six full calendar months as of the month-end prior to the quarterly review, so recent initial public offerings will have to wait a bit longer to be considered for inclusion.

To stay in the Composite, a company’s float must not drop below 0.025 per cent, or 2.5 hundredths of a percentage point, of the total value of index.

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