2 for 1
Volume 13 Issue 12
Neil Macneale’s
Stock Split
Newsletter
®
www.2-for-1.com
December 12, 2008
NOVEMBER SPLITS, OUR BUY
PORTFOLIO ITEMS
Weatherford International
The 2 for 1 Methodology
W
eatherford (WFT) is the stock I’m buying
xxxxxfor
the 2-for-1 portfolio. More on this
company toward the end of the column. There
were no splits in November. If you already own
all 30 2-for-1 stocks, including Chubb, you can
follow my lead. See below. However, if you are
not yet up to the full 30 stock portfolio, I
recommend you consider buying one or more of
the cheap stocks already in the portfolio. As we
go to press, 2-for-1 owns four stocks selling for
less than their book value and with a P/E ratio of
less than 5. CMC, XTXI, TNP, and TCK all look
like bargains, but TCK, our Canadian mining
stock, takes the prize.
Teck Cominco (TCK) is now down to a
P/E of 1.35 and a price-to-book of 0.24. Even if
earnings fall and the value of its proven reserves
gets downgraded significantly, it would be hard to
argue this company is not literally being given
away. If the stock remains this depressed for long,
look for a takeover bid to surface. Tsakos Shipping would be my next choice because it is also
very cheap and it’s paying a 9.2% dividend. CMC
and XTXI are bargains but they are closer to the
top of the portfolio ladder and will be sold soon.
There are three other splits (Textron TXT
8/07, Manitowoc MTW 9/07, and Weatherford
WFT 5/08) that were not previously purchased
for the 2-for-1 portfolio but now also deserve a
look by anyone still building up to 30 stocks. They
too are selling at a P/E of 5 or less, and a priceto-book of less than 1. It is understandable these
companies should be down along with the rest of
the market but, in my opinion when a stock gets
this cheap, it is clearly an overreaction.
Weatherford, our 2-for-1 pick, is a very
solid oilfield service company doing business
worldwide. It split in May and has lost about 77%
of its value since then. At its current valuation
we’ll be buying its assets at less than cost and
getting future earnings for free.
T
he stocks held in the 2-for-1 portfolio, listed on
xxxxthe back page, are the same as those listed in
October and November. This is not normal and it’s
beginning to make me uncomfortable. Other than only
investing in splits, the second most important feature
of the 2-for-1 strategy is to keep the portfolio dynamic;
that is, moving the portfolio through time with one
buy and one sell per month. This routine provides a
simple “sell discipline” while clearing stocks from the
portfolio at the time their “split outperformance” is
tapering off. Because of the lack of new splits, this
routine has broken down, and I confess my discomfort
with the current situation. For this reason, I’ve decided
to get back on track by selling Chubb as soon as
possible and putting an order in for Weatherford
(WFT) as soon as I have the cash from the Chubb sale.
See adjacent column.
Hopefully, this move to re-establish our monthly
routine will correspond with something like a bottom
in the stock market implosion. Our portfolio, at the
end of November, was down 9% for the month and
43% for the trailing 12 months, a result slightly worse
than the market as a whole. While feeling very sorry
for my readers and myself, I’m reminded we still have
much to be thankful for and things will eventually get
better. We already have a fine new President elect who
brings a sense of hope and optimism to Washington,
something we’ve been missing for so long. So please
look on the bright side and have a great holiday season.
THIS MONTH’S SELL
Chubb Corp.
A
s noted above, I will be selling Chubb next week
xxxxxto begin the process of getting 2-for-1 back to its
normal buy and sell routine. I will start with a limit
order to sell Chubb, probably at about the $49 to $51
dollar level, but I will go lower if necessary to complete
the sale. At $50, we will realize a tiny gain of a few
hundred dollars. Small comfort, but it’s better than the
30.1% drop in the S&P 500 over the same period.
2 for 1
December 2008
2 for 1 MODEL PORTFOLIO – NOVEMBER STATEMENT
# SH
BOUGHT
QUOTE
AT
BUY
QUOTE
ON
11/28/08
BASIS
START
MONTH
1901.24
END
MONTH
2034.97
% OF
PORT
1.78%
112
220
260
150
90
260
336
130
95
134
130
270
128
260
171
140
190
110
172
135
140
140
440
116
240
150
90
200
126
300
04/17/06
09/16/02
05/15/06
07/17/06
08/25/06
09/18/06
10/16/06
12/18/06
01/16/07
02/20/07
03/19/07
05/22/07
06/18/07
07/16/07
08/20/07
09/17/07
11/19/07
04/16/07
12/17/07
01/23/08
10/17/05
02/20/08
11/20/06
03/17/08
04/21/08
05/19/08
06/16/08
07/22/08
08/19/08
09/15/08
48.120
4.853
21.505
34.060
53.480
19.390
31.500
42.210
38.649
42.850
42.915
41.200
51.810
31.150
36.667
47.750
69.560
37.155
37.950
40.970
13.300
46.010
15.713
51.250
27.873
46.750
74.980
30.890
50.400
19.180
51.360
11.980
13.390
28.890
54.140
17.740
4.150
35.890
43.110
25.150
21.230
4.920
28.290
15.830
17.660
44.470
16.660
25.580
20.130
36.820
21.240
30.900
8.260
21.440
18.670
26.100
50.040
13.760
9.100
24.000
5399.43
1075.79
5601.29
5118.99
4760.64
5051.39
7311.18
5497.29
3678.43
5751.89
5588.94
7933.98
6641.67
7918.98
6279.99
6694.99
8623.18
4093.92
6537.39
5540.94
1866.66
6451.39
5486.20
5954.99
6699.59
7022.49
6758.19
6187.99
6360.39
5763.99
5834.08
2442.00
3772.60
5107.50
4998.60
4594.20
3430.56
4254.90
4166.70
3171.78
3022.50
2648.70
3781.12
4399.20
3031.83
5230.40
3439.00
2876.50
4255.28
4897.80
4494.00
3941.00
5244.80
2774.72
4456.80
4318.50
6009.30
2912.00
2646.00
7371.00
5752.32
2635.60
3481.40
4333.50
4872.60
4612.40
1394.40
4665.70
4095.45
3370.10
2759.90
1328.40
3621.12
4115.80
3019.86
6225.80
3165.40
2813.80
3462.36
4970.70
2973.60
4326.00
3634.40
2487.04
4480.80
3915.00
4503.60
2752.00
1146.60
7200.00
5.04%
2.31%
3.05%
3.80%
4.27%
4.04%
1.22%
4.09%
3.59%
2.95%
2.42%
1.16%
3.17%
3.61%
2.65%
5.45%
2.77%
2.46%
3.03%
4.35%
2.60%
3.79%
3.18%
2.18%
3.93%
3.43%
3.95%
2.41%
1.00%
6.31%
CASH
CB
CMC
B
WFC
OXY
FUL
XTXI
EMR
SIAL
HSC
CSL
TCK
OMC
SEE
JCI
TAP
CRS
CMI
TNP
D
WGOV
PEG
STLD
SU
RBA
LIFE
UNP
PCU
GHM
ISYS
CHUBB CORP
COMMERCIAL METALS
BARNES GROUP
WELLS FARGO
OCCIDENTAL PETROLEUM
H.B.FULLER CO.
CROSSTEX ENERGY INC.
EMERSON ELECTRIC
SIGMA-ALDRICH
HARSCO
CARLISLE
TECK COMINICO LTD
OMNICOM GROUP
SEALED AIR CORP
JOHNSON CONTROLS
MOLSON COORS BREWING
CARPENTER TECHNOLOGY
CUMMINS INC
TSAKOS ENERGY NAVAGATION
DOMINION RESOURCES
WOODWARD GOVERNOR
PUBLIC SERVICE ENTERPRISES
STEEL DYNAMICS
SUNCOR ENERGY
RITCHIE BROS. AUCTIONEERS
LIFE TECHNOLOGIES
UNION PACIFIC
SOUTHERN COPPER
GRAHAM CORP
INTEGRAL SYSTEMS, INC
TOTAL CASH AND EQUITIES
173652.18
ACCOUNT VALUE SUMMARY - 11/28/08
Description
Last Month’s Closing Equity
Change in Stock Value
Interest & Dividends
This Month’s Closing Equity
Amount
125424.61
-11407.72
133.73
114150.62
Securities Net Market Value
Closing Cash Balance
112115.65
1901.24
THE FINE PRINT
The above list represents all of the securities recommended, bought
and which are now present in the 2 for 1 portfolio. The 30 stocks on
this list constitute the entire 2 for 1 portfolio. The graph of the
performance of the 2 for 1 portfolio to the right was adjusted to equal
the S&P 500 at the end of July, 1992. The S&P 500 is an index
tracking the 500 largest U,S, companies. 2 for 1 tracks an actual
portfolio of only 30 companies, large and small. 2 for 1 may be more
or less volatile than the S&P 500. Many mutual Funds use the S&P
500 as a performance benchmark. The 2 for 1 portfolio was started in
July, 1996 with $50,000. The $173,652 basis above reflects the
$123,652 in capital gains, dividends, and interest accrued since the
portfolio’s inception. It shall not be assumed that recommendations
made in this issue of 2 for 1, or in any future issues, will be profitable
or will equal the performance of the securities on this list.
x
114150.62
100.00%
PORTFOLIO PERFORMANCE
3400
2 FOR 1
2800
2200
1600
1000
400
S&P 500
93 94
95 96 97
98 99 00
01 02 03 04
05 06 07 08
2 for 1 is published and distributed by Neil Macneale, Inc.,
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