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This Stock Didn't Quite Make The Cut


Up Front: PAPER PLAYS

THIS STOCK DIDN'T QUITE MAKE THE CUT

GENERAL MOTORS' SPECIAL stock for its Electronic Data Systems unit has done so well that it has outgrown

the Standard & Poor's MidCap index. But the stock, known as Class E, is not stepping up to the prestigious S&P 500-stock index. Here's why.

Basically, S&P doesn't think enough Class E shares will be available for public trading. That's because GM recently placed a huge wad of E shares--173 million--in its pension plan to help cover a chronic shortfall. This leaves 55% of the shares for the public, or 263 million. That may seem plenty. The index funds mirroring the S&P 500 would only have taken 32.5 million of those E shares. But S&P doesn't want almost half a 500 stock unavailable.

Class E seems to have shrugged off the slight from Standard & Poor's--which, like BUSINESS WEEK, is a unit of McGraw-Hill--with no lasting effect. Since getting the boot from the MidCap index Mar. 9, the stock has held quite steady, closing Mar. 22 at 403/8.EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABI Jeffrey M. Laderman


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