June 2025
2 for 1 Index
June 13, 2025
When the world goes crazy the stock market tends to follow right along. The recent volatility of some of the stocks in the 2 for 1 Index is remarkable, but really just a reflection what's going on in the overall market and the world at large. And what do we have when we look at the candidates for possible additions to the 2 for 1 Index? It's not a pretty picture. I looked over five recent spilt announcements thinking surely there must be one or two that would be a good fit. Nope. They range from way too expensive to simply bonkers.
APi Group Corp. (APG) is splitting 3 for 2. It's a life safety maintenance and consulting company (fire protection services, alarm systems, and secure access systems) formed in 2020. APG is the most "normal" of the five companies listed here. However, the company is not very profitable, the stock is expensive, it pays no dividend, and the balance sheet is relatively weak. Our premise is that a stock split often signals the board's confidence in a company's future prospects, but I can't see where that confidence comes from in this case.
Interactive Brokers Group Inc. (IBKR) was discussed in the May issue of this newsletter and its fundamentals and market price haven't moved much since. The Index doesn't need another financial services company.
Pegasystems Inc. (PEGA) is a developer of business process and customer engagement software, currently heavily concentrated in Artificial Intelligence (AI). This is a real company with real income. But no one can predict where AI, being "the new big thing", will be a few years down the road, and more importantly, which AI developers will be the winners and which will fade away.
ARK 21Shares Bitcoin ETF (ARKB) is splitting 3 for 1. It's not really a 2 for 1 candidate because it's an ETF, but I include it because it's a great example of the world gone crazy. 1) The future of cryptocurrency is totally unpredictable, and 2) Cathie Wood, who runs the ARK portfolio and, in recent years, has had an absolutely terrible track record. Why would anyone invest in this?
Regencell Bioscience Holdings Ltd. (RGC), splitting 38 to 1, is a bioscience company investigating the commercialization of traditional Chinese medicine. RGC has 12 employees and zero income. That the market can put a value of $7.3 Billion on this company is, in my humble opinion, completely bonkers.
CTO is past due for deletion. I liked the idea of having a real estate component in the 2 for 1 Index when I added it three years ago, but I misjudged the length of time it would take for the commercial market to recover from the pandemic. There are still lots of empty buildings all over the country. CTO was a loser for 2 for 1. Time to bail out.
In summary, for June, there will be no addition to the Index and CTO will be deleted. The 27 stocks that will now be in the Index will be rebalanced to equally weighted positions at market close on Monday 6/16/25.
Neil Macneale
© Copyright 2025 - Neil Macneale III
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