Stock Splits Have Been Announced by 2 Major Growth Companies in the U.S.

Both Amazon and Google stock will split 20 to 1

What is a stock split?

   A stock split is an action in which a company issues additional shares to shareholders, increasing the total number of shares by the specified ratio. Companies most frequently choose to split their stock to lower the price for the investors, and to increase the liquidity of trading in its shares. 

    A split does not fundamentally change the company’s value, even though the number of shares outstanding increases by a specific multiple. The most common split ratios are 2-for-1 or 3-for-1, which means that the stockholder will have two or three shares, respectively, for every share held earlier. 

    For example, if you own 1 share of any stock worth $1,000, and there was a 2-to-1 split with that stock, then you would own 2 shares that cost $500 (your total investment is still $1,000).

Why is this good?

Amazon and Google have been leading the technology sector for quite some time, and the two large powerhouse companies have only grown larger since the rise of the pandemic. AMZN and GOOG are the two most influential economic cultural forces in the world, both are listed in the Big Five American Information Technology companies.

   Investing in Amazon is unlike most other stocks because you are well diversified just from owning one single company. Amazon focuses on e-commerce, cloud computing digital streaming, and artificial intelligence. Amazon also owns many other corporations that are completely unrelated, such as Whole Foods, IMDb, Zappos, and many more. 

For over two decades, people have relied on the ability to Google things to find answers to ANYTHING. Google morphed the way we work and learn in our everyday lives by not having to look through encyclopedias, providing a much easier and more efficient way using the internet. Google specializes in internet related services and products, including a search engine, online advertising technologies, cloud computing, software, and hardware. Google also owns many other companies such as YouTube, Fitbit, Nest, Waze, and more.

If Google and Amazon are such great stocks, then why doesn’t EVERYONE own them? After the split occurs, we predict that more investors will have both Amazon and Google in their portfolio’s because the stocks will be more affordable! Amazon and Google provide long-term growth potential and multiple expansion.  The price of Amazon as of today is $2,966.00, and the price of Google is $2,663.25. If the stock had split today, or splits at today’s price, Amazon would cost $148.30, and Google would cost $133.16 per share.

Amazon will split 20 to 1 on June 3, 2022

Amazon Stock Split History

Amazon.com (AMZN) has 3 splits in our Amazon.com stock split history database. The first split for AMZN took place on June 02, 1998. This was a 2-for-1 split, meaning for each share of AMZN owned pre-split, the shareholder now owned 2 shares

AMZN’s second split took place on January 05, 1999. This was a 3-for-1 split, meaning for each share of AMZN owned pre-split, the shareholder now owned 3 shares. 

AMZN’s third split took place on September 02, 1999. This was a 2-for-1 split, meaning for each share of AMZN owned pre-split, the shareholder now owned 2 shares.

Google will split 20 to 1 on July 1, 2022

Google Stock Split History

Alphabet (GOOG) has 2 splits in our GOOG split history database. The first split for GOOG took place on March 27, 2014. This was a 2002-for-1,000 split, meaning for each 1,000 shares of GOOG owned pre-split, the shareholder now owned 2002 shares.

GOOG’s second split took place on April 27, 2015.  This was a 10,027,455-for-10,000,000 split; meaning, for each 10,000,000 shares of GOOG owned pre-split, the shareholder now owned 10,027,455 shares

What does this mean?

Amazon and Google do not pay a dividend; the split is a way to give current stockholders a bonus, because after the split, each investor will receive 20 new shares of stock! More importantly, the price of owning shares in AMZN and GOOG after the split will be 20-times less expensive, and investors are hoping that the share price will continue to grow after the split.

Don’t hesitate to reach out to us at Schenley if you have any questions about purchasing Google or Amazon.

We are happy to help!

(412)-749-9256

info@schenleycapital.com

Schenley Capital Inc.,

417 Walnut Street

Suite 200

Sewickley, PA 15143

Did You Know?

Even though we are Investment Advisors, we feel that it is imperative to discuss Life Insurance as Financial Planners.

     EVERYONE could use Life Insurance at some point during his or her lifetime; often, it is about financial security for someone we care about, protecting one’s income, or even assisting in the cost of final expenses.

Life Insurance protects your investment portfolio and provides your loved ones from potentially devastating financial losses if something were to happen to you.   Financial security could mean that the policy helps to pay off debt; or helps pay living expenses, medical expenses, final expenses, college tuition, or other financial requirements you, or your loved ones, might have in the future.

     Life Insurance can provide cash when you need it most.  It can give peace of mind to have that security in your financial portfolio as a defensive strategy.  If you select the right type of insurance for your needs, combined with a strong investment portfolio (offensive strategy), you could leave a legacy behind.  We call this Portfolio Protection.  Therefore, you do not have to invade your investment portfolio if something happens to you.  Managing this risk is only part of the puzzle that we assist with when we create financial plans.   Imagine building a house; you must start with the foundation first, and then build from the ground up.  We take a holistic approach to financial planning by protecting and growing our clients’ estate through supplementing the right type of life insurance for the investment strategy.

     Many questions arise as to what type of insurance is right for you? There are two major types of Life Insurance.  Think of Term Insurance as renting a house, and Whole Life Insurance as owning your own home.

     Term Insurance typically starts off very in expensive and increases in cost as you age.  Like renting a house, the landlord raises rent as time goes by.  If you do not pass away during the time that you are paying for the Term, then you will NOT receive any cash.

     Whole Life differs because you DO get your money back.  It is more like owning a house; coverage is in force permanently.  You pay a level premium based on your age and health when you purchase the policy. You still get the death benefit; although, unlike the Term policy, Whole Life builds cash value that is available while you are living.  This is wonderful because you may withdraw cash, tax-free, for ANY reason before the death occurs.  As financial planners, we love that a policy can assist with retirement, home improvements or education.

     At Schenley, we typically like to recommend a blend of two types of insurance: Term Life Insurance and Whole Life Insurance.  We suggest a larger amount of 20–30-year term, and a smaller portion of Whole Life.  The Term will provide enough insurance required in the short term at an affordable rate, and the Whole Life policy will continue to grow overtime, building cash value along the way and leaving behind a lifetime legacy.  Depending on the individual’s situation, we could also add Disability and Long-Term Care Insurance into your Life Insurance policy, thus reducing the cost tremendously by combining it with riders.

     We think of life insurance as risk management for families for their entire lifetime, not just until retirement.  Do not hesitate to reach out to us about Life Insurance.  Whether you are a current client of Schenley, or if you are just someone that has questions about your unique financial position, we can assist in making the right choices that work for you.

Schenley Capital, Inc. 417 Walnut Street Suite 200, Sewickley, PA 15143, (412)-749-9256 (info@schenleycapital.com)

It has been an unsettling January 2022!

     The technology stocks have been hit very hard in this first month of the new year.  Many of the US large growth companies have dropped in price, thus causing the US large cap mutual funds to drop as well.  These US large cap growth companies have been the fastest growers in the past five years.  There have been numerous events that beat down the market this January.  On Wednesday, the Federal Reserve’s Chairman Powell stated that the Federal Reserve will raise interest rates this March; it has been a long awaited and expected event, still leaving the timing of the market volatility impossible to predict. 

     This market volatility is very unsettling.   We have watched the market fall -1,100 points in one day, and then bounce back to close at +101 on the very same day.  The VIX, which is the index with indicates market volatility has been unusually high; it reached +38 on the most volatile days and is hovering around an average of +30.  The V-shaped curves in the market indicates that there is a lot of cash on the sidelines and many investors are still willing to buy on the “dips”, or days when the market drops!  The increased purchasing activity could be a good sign, indicating that investors are hungry for bargains and that the market is resilient. 

     We are very encouraged by the 4th quarter earnings reports by the major technology companies and other US Large Cap companies such as Microsoft, Apple, McDonalds.  Apple had VERY strong earnings last night, as it announced having its largest revenue of any single quarter in history!  Sales are growing at +11%, and the company reported increased sales in every single product category!  The strong earnings illustrate that our US companies are in good shape, their balance sheets are strong, and they have a high cash position.  The very strong GDP numbers at 6.9% in December 2021 also provide the market with some stability. 

     There are detractors within the markets, which we cannot ignore.  The Omicron variant spread rapidly in December, which made many investors nervous worldwide.  During the fourth quarter, there were severe supply chain disruptions.  Our US ports have been in a backlog situation for months.  This issue is not going to be resolved overnight; although, many companies are building factories in the US to mitigate this issue.  This worldwide shortage of electronics, building materials and all types of auto-parts is affecting all sectors of the market. Volatility remains the greatest concern for investors. 

Where do we go from here? 

     We have had a long run in this bull market, and many investors have been attracted to pandemic (or other cloud-type stocks), which have become very expensive.  We have already positioned each of our clients’ portfolios with high quality equities that are mature and typically pay high dividends. Interest rates are rising, as we may see four rate hikes, in 2022.   We believe the high performing stocks in a higher interest rate environment will be financials, consumer staple stocks, and energy companies; therefore, you may witness us replacing your more expensive stocks for the “steady eddy” companies, such as banks, energy and oil companies, and the Proctor & Gambles of the world.  Bonds should also become more attractive as rates rise. 

We are always researching to find additional opportunities for our clients to increase their wealth.

Grandeur Peak (GISOX) 2021 Distribution

     Another mutual fund company that we wanted to take note of, is Grandeur Peak (GISOX) due to their extraordinary performance throughout the pandemic. We use Grandeur Peak in many clients’ portfolios in the International Small Company category. Considering all the volatility during COVID-19, this fund stands out above the rest as it consistently performed above the benchmark. Grandeur Peak has informed us of the predicted distribution so we can also make our clients aware.

The Distribution this year is predicted to be about $2.25!

This means, for each share of GISOX, you receive 2.25x of income. For example: If you own 100 shares, you receive $225. Since the fund is only trading at $26.40 right now, a $2.25 distribution could be significant!  Once Grandeur Peak releases the distribution, you will automatically own more shares, at a lower cost!

     In contrast, the International Small Company category experienced poor performance during the pandemic.  Consequently, small businesses have struggled to survive during the past year and a half both nationally and internationally. Whether it’s the lack of capacity, technology, financing, or resources, one can argue that small companies have faced the most hardship as large companies have prospered and increased sales during COVID-19. As a result, there have been numerous reports of smaller stores, restaurants, and Mom-and pop businesses closing close to home and across the country. After the steep market drop beginning in March 2020, the International Small Company category is finally starting to come back to equilibrium; the benchmark finally has a positive year-to-date.

     Considering the circumstances, Grandeur Peak (GISOX) has done an exceptional job of maintaining during the bearish drops and continuing to improve as the world persists in the battle with COVID-19. 

Additionally, Grandeur Peak consists of Non-U.S. Equity; mostly small companies that you may have heard of, like Silergy Corp, Wix.com, Lululemon Athletica and many you that aren’t as recognizable.   Headquartered in Salt Lake City, UT, Grandeur Peak (GISOX) invests alongside shareholders, which helps it earn a High People Pillar and Gold Morningstar rating.  The share class maintains a cost advantage over its competitors in the International Small Company category and continues its extremely low expense ratio.  Between the distribution of Grandeur Peak (GISOX), combined with the affordable price, this is a wonderful fund to own or even purchase more of.

     Both Brown Capital, Inc. (BCSSX) and Grandeur Peak (GISOX) are closed for new sales until next year; however, as institutional investors, we can still purchase more for you so do not hesitate to reach out!  Contact us at Schenley Capital, Inc. if you have any questions or concerns about Grandeur Peak (GISOX), Brown Capital (BCSSX), year-end taxes, or anything else that comes up financially!

Written by Derek Green, Investment Advisor

dwgreen@schenleycapital.com

412-749-9256

Ballie Gifford 2021 Distribution (BGEGX)

      A mutual fund company that we particularly wanted to touch on, that we use in a lot of clients’ portfolios, and has performed with extraordinary volatility this year and throughout the pandemic is Ballie Gifford (BGEGX).  Ballie Gifford’s distribution prediction for their annual distribution is here!

The Distribution this year is predicted at $.38!

This means, each share you own of BGEGX will accrue .38x (times) that amount.  Since the share is only $25.02 right now, a $.38 distribution could be significant for you!  Once you receive the distribution, you will automatically own more shares, at a lower cost!

     As we all know, the Emerging Markets category has been getting crushed throughout the pandemic.  The benchmark is still down -4.46% year-to-date, due to the volatile market overseas.  The world’s most vulnerable countries are the ones that are just developing because they lack the capacity, technology, and/or resources to expend the struggle.  After the very steep drop, the Emerging markets category is finally beginning to come back to normal.

     Considering the circumstances, Ballie Gifford (BGEGX) has done an extraordinary job of maintaining during the bearish drops and continuing to improve as the rest of the world dispatches the COVID 19 virus.  Ballie Gifford consists of Non-U.S. Equity; mostly large companies like Samsung and Nestle, but also some small companies, such as Tencent Holdings (which is one of our favorite gaming stocks).  Headquartered in Scotland, Ballie Gifford (BGEGX) has a very sensible philosophy to merit a high process pillar rating.  The fund has consistently maintained an overweight of liquidity exposure and volatility exposure compared with category peers.  The high liquidity exposure is attributed to high trading volu{“type”:”inserter”,”blocks”:[{“clientId”:”eb0b28a6-ba4e-41e5-8f0f-c26a3d11bdfe”,”name”:”core/image”,”isValid”:true,”attributes”:{“alt”:””},”innerBlocks”:[]}]}me during volatile times, choosing the 76 stocks timing very wisely.

Don’t hesitate to reach out to us at Schenley Capital, Inc. if you have any questions or concerns about Ballie Gifford (BGEGX), year-end taxes, or anything else that comes up financially.

info@schenleycapital.com

412-749-9256

Written by Derek Green, Investment Advisor

Brown Capital Management, LLC (BCSSX) 2021 Distribution

     We have received many questions from our clients about the dividend this year at Brown Capital Management, LLC (BCSSX). If you are like the rest and are searching everywhere for information about your favorite mutual fund that you own, then you may stop investigating now. On Dec 13, Brown Capital gave a distribution to all its shareholders!

The Distribution for BCSSX this year was $10.85!
This means, each share/unit you own of BCSSX, you will receive 10.85x.  For example: If you own 100 shares, you receive $1,085. If you currently own Brown, you now own more shares/units from the distribution, and it automatically purchased more at a lower cost!

     Brown Capital Management, LLC (BCSSX) is probably one of our favorite mutual funds, and we try to own it for all our clients that we have mutual funds for. Brown Capital is a vastly growing U.S. small company mutual fund with its main office in Baltimore Maryland. Morning star gives it a gold rating, due to its small, but cohesive team with a distinctive process and impressive track record. The fund has been a consistent top quartile rank performer and they invest mostly about 60% in technology stocks, and 40% in healthcare.

This year more than ever, we are excited about the dividend because it has struggled so much in 2021. We can all agree the technology sector has hit some real unforeseen volatility, considering the bullish technology trends could have been the sole reason we were able to get through the hardest times of the pandemic.  On the contrary, this makes Brown Capital Management, LLC (BCSSX) a wonderful time to purchase more shares, due to its lower price.

Don’t hesitate to reach out to us at Schenley Capital, Inc. if you have any questions or concerns about Brown Capital, year-end taxes, or anything else that comes up financially. Send us an email at dwgreen@schenleycapital.com elliegenter@schenleycapital.com or call us at (412)-749-9256

We sincerely appreciate your business and wish you and everyone around you a happy holiday and happy new year!

Written by Derek Green, Investment Advisor

Hate Paying Taxes?…Year-End Tax Always Matters.

It is different this year… 

  1. Start a Donor Advised Fund at The Pittsburgh Foundation or Community Foundation –  

 

In 2021 you can donate Cash to your donor advised funds or a gift of cash to any NON-Profit organization  and you will be able to deduct up to 100% of your income.  Usually it is up to 60% of your income!! 

 

  • Do you have low-cost stock in your portfolio or large capital gains?    A charitable donation of low-cost stock or any type of stock in 2021 will significantly reduce your  taxable income for 2021!!! 

 

  • The Pittsburgh Foundation is a wonderful Community Foundation (TPF). TPF is one of the nation’s largest community foundations and they have been helping individuals and families make contributions for 75 years!! 

 

  • A gift of cash or low basis stock would greatly reduce your 2021 taxable income. 

*As a Donor, you can choose which non-profit organizations to give to; the Pittsburgh Foundation will quickly approve the charitable gift and send it directly to a church, school, or non-profit of your choice. They approve of gifts on a weekly basis! 

  • There is a $10,000 minimum to establish your Donor Advised Fund 
  • Schenley Capital is an approved money manager by The Pittsburgh Foundation; we manage many donor advised funds for individuals, families, and organizations! 

 

  • You can appoint your kids to be the successor for the donor advised fund to get them involved in philanthropy early in life! 

 

     2. Max out your retirement plans – 401(k), SEP(pre-tax) and or Individual IRA(after tax).  You can also contribute to an IRA for you and your spouse; $6,000 each, or if you’re +50 Yrs Old then you may contribute an additional $1,000.  Everyone over age 50 may contribute $7,000 per-each-person, per-each-year.  Therefore, you could make your contribution for 2021 now, and your 2022 contribution on January 1st, 2022!!   

          a. You can contribute to your 401(k) annually at the 2021 level of $19,500 +50 yrs Old +$6,500 = total of $26,000!!! 

     3. Tax Harvest – Review your Stock Portfolio and sell stocks at a loss, to match them against your gainsTake some gains to trim your portfolio and rebalance your large positionsRemember, there are no capital gains tax in retirement accounts. 

     4. Pay all estimated Taxes in 2021  A way to reduce your taxable income in 2021. 

     5.Business Owners – Should defer income to 2022.  Owners should also accelerate deductions or make purchases of equipment and invest in business expansion items. Anything which will be a business deduction. Office or plant equipment, computers, furniture things which will expand the business. 

These tax saving strategies will bring large opportunities in 2021.  It is all about lowering your taxable income and strategies to create useful deductions for individuals and business owners..   

 

What’s going on with the J&J company Split??

     Recently, Johnson & Johnson has released that they will be splitting into two publicly traded companies. The pharmaceutical segment will hold onto the name J&J, while the consumer product segment has yet to be named. This split will allow J&J to focus on their more profitable segments, pharmaceuticals, and medical devices. The pharmaceuticals and medical device division will generate $77 billion in revenue while the consumer products are estimated to generate $15 billion. After the split, the two companies are slated to be more profitable and will maintain the considerably high dividend of $4.24 a share or a 2.55% dividend yield! 

     Johnson & Johnson’s consumer products segment (which has yet to be named) include household products such as: Band-Aid bandages, Aveeno, Neutrogena skin care products, Listerine, etc. The yet-to-be-named company will also acquire litigation, claiming that its baby powder causes cancer, an allegation that has been fiercely denied. 

     Pharmaceutical and medical device segment are the faster-growing and higher-revenue generating segment of J&J; generating about 34% of the company’s overall sales from 2020. This sector is comprised of prescription drugs, medical devices, robotics, and the COVID-19 vaccine.  

    Additionally, news of the split spiked the price of the stock by 3% and it hovers at about $162.37. Another bit of good news for shareholders is that J&J will maintain its dividend; although, not much can be said for its consumer product segment. Overall, the split will unlock more value for shareholders and allow the company to focus on rapidly growing pharmaceutical and medical devices segment.  

    Other companies in the same sector as J&J, such as Pfizer and Merck are reorganizing to focus on more profitable segments of their businesses. Their earnings have been weighed down in recent years due to its consumer healthcare business. This does not appear to be the case with J&J, as both sectors (pharmaceuticals/medical device and consumer products) provide a healthy profit. 

   

The Johnson & Johnson split will unlock significant shareholder value as J&J will be known as the top performer in each sector.  

 

Contact Schenley Capital Inc. if you have any questions  

Phone: 412-479-9256

Email: info@schenleycapital.com

IPO’s vs. DPO’s

     An IPO (Initial Public Offering) and a DPO (Direct Public Offering) are both when a company directly offers its stock to the public by listing it on an exchange, like the NASDAQ. What is the difference?

     During an IPO, a company will issue new shares, which are backed by big banks and institutions. This is often referred to as a primary offering.  These big banks and institutions will usually help set the initial price of the stock and buy shares of that company. When a company initially goes public, one can purchase the stock at the price of the Initial Public Offering.  IPOs are considered a primary offering because it is the first issuance of stock from a private company for public sale (new shares).

     A Direct Public Offering (or DPO) is also a primary offering because the company offers its securities directly to the public, like an IPO.  However, a DPO differs because it is traded over the counter, rather than a public exchange (such as the NYSE (New York Stock Exchange)).  This way of offering a security in the over-the-counter market, allows the employees, investors, and anyone that holds the stock to cut out the intermediaries from the public offering, essentially lowering price of the stock.  This is attractive to small companies because they can directly sell shares to the public without any lockup period. Raising money independently allows a firm to avoid restrictions of capital funding because the terms are established solely by the issuing company.

     Recently, some well-known companies have gone public by releasing their primary shares (IPO and DPO) to the public.  Coinbase, Duolingo, and Robinhood have been some of the most renowned IPOs in the past couple of months and you can now buy and sell those stocks in the secondary market. 

     Now, the big question is whether you should invest on the first day of the offering or wait to see if the shares sell at a cheaper price. In the past year, Affirm (a company that helps create payment plans for consumer items) doubled in price the first day after the IPO; going from $49.99 per share, up to $97 per share. Almost 1 month later, Affirm’s stock hit an all-time high of $146 per share. After hitting all-time highs, the stock started to decrease in value.  Over the next few months, the stock lost over 50% of its value, and is currently sitting around $60 per share. The same can be said about Coinbase. It was originally listed with a DPO and after it opened; the price went from $381 to $429 in a matter of minutes, only to decline for the next few weeks as the price started to correct itself down to the $225-$245 price range.  Based on the recent IPOs and DPOs in the past year, we can see that the price of the stock increases substantially for the first couple of days, however, the price seems to correct itself as the IPO excitement around the stock wears off and secondary market trading begins.

Call us if you have any questions about past or future initial public offerings!  We are happy to help!                                                                                

Written by: Jack McCormack