Why Shares of Control4 Corporation Are Spiking 10% on Its Addition to S&P SmallCap 600

Shares of Control4 Corporation (NASDAQ: CTRL), a leading provider of automation and premium control solutions for the connected smart home, are soaring 10% on Friday after it was announced the young company will replace Albany Molecular Research Inc. (NASDAQ: AMRI) in the S&P SmallCap 600 effective prior to the Tuesday, Aug. 22 opening bell.

Analysts have long debated the cause and effect of being added to an index such as the S&P SmallCap 600. Some fund managers are restricted to buying stocks from certain indexes. Therefore, Control4 being included in the S&P SmallCap 600 opens the door for some fund managers to purchase shares, which drives up demand and the stock price. But other analysts believe the reason behind Control4’s addition to the index was higher earnings, which could have led to the higher stock price.

Whichever side of the debate you agree with doesn't matter because Control4's business is growing and its stock has exploded over the past year and a half.

Source: Fool.com