Post by Admin/YBB on Nov 20, 2021 11:30:35 GMT -6
Pg 10-11. FOMC Minutes on WEDNESDAY.
REVIEW. Durational Capital is buying out Casper Sleep (February 2020 IPO at $12) at $6.90/share. Casper pioneered direct-to-consumer model for mattresses, and was a Unicorn for a while, but it couldn’t make it as a public company.
PREVIEW. All the UN COP26 got on COAL was phase-down, not phase-out, due to opposition from China, India, the US. Globally, 35% of power is produced from coal now and that may go down to 5% by 2050. High oil and gas prices now are making it difficult not to use cheap (but dirty) coal. Stocks have sold off (BTU, ARCH); VanEck shut its coal ETF in December.
DATA THIS WEEK. Existing home sales on MONDAY; manufacturing PMI, services PMI on TUESDAY; Q3 GDP (2nd est), durable goods orders, personal income and spending, wholesale inventories, new home sales on WEDNESDAY.
CLOSED. US stocks and bonds on THURSDAY; US stocks close early at 1:00 PM and bonds at 2:00 PM (Eastern times) so that you can logoff from here and GO SHOPPING.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Dominion Energy (D; yield 3.4%, was cut last year; fwd P/E 18.3; regulated businesses (90%; conventional and alternative energy under the VA Clean Economy Act) as well as unregulated businesses (10%); committed to ESG and net-zero carbon by 2050 and future capex plan show that; pg 14);
Bitcoin mining stocks (Core Scientific/XPDI (planned SPAC merger); RIOT (in Rockdale, TX using old Alcoa/AA facilities and infrastructure), MARA (under SEC investigation related to restricted shares), SDIG (uses toxic coal waste for energy); pg 16);
small-cap manufacturer LCI/Lippert Group (LCII; yield 2.3% (unusual for SC); fwd P/E 12.1; brands Taylor Made boat parts, Thomas Payne RV furniture; OEM business (80%) and aftermarket business (20%); supply-chain disruptions; growing by acquisitions, CURT Group (2019); pg 27).
BEARISH. See other stories.
Pg 12: FOLLOWUP. Macy’s/M remains attractive. It is spinning off its digital business. Shoppers are coming back to stores and malls. It is reevaluating previously announced store closures. Activist Jena Partners is involved. (Basically, retail was terrible pre-pandemic due to Amazon/AMZN factor, and pandemic killed many weak stores, but most retail survivors are doing great now)
Pg 28: FUNDS. Bill (father) and Cole (son) SMEAD co-manage concentrated value SMVLX. Their theme is that millennials will behave almost like boomers when it comes to investing and finance – a pattern they have observed within their large family. Fund invests in essential businesses that may be out of favor temporarily – malls, homebuilders, financials, energy, etc.
Pg 30: CRYPTOS in FUNDS. While the SEC has not approved a physical-crypto (a oxymoron?) ETF, but only futures-based crypto ETFs, there are no restrictions on mutual funds owning cryptos (physical or futures). All they need is a revised prospectus with disclosures. Examples include bond BASIX; commodities GLDPX, GCC; stocks ARKW, KMKNX, APPLX, FOMO, etc. (This looks like a loophole. When do minor crypto holding in mutual funds turn into major holdings?)
Pg 31: TECH TRADER. Tech selloff due to supply-chain disruptions is creating buying opportunities (CSCO, AAPL, DELL, HPQ, etc). Beware whether the issues are transitory (e.g. for for IT infrastructure) or permanently lost sales (e.g. for consumer electronics holiday gifts).
Pg 32: ECONOMY. Consumer SPENDING, retail SALES (nominal) and INFLATION are all rising, but the UNIT sales and GDP are not rising as fast. The UM CONSUMER CONFIDENCE fell to 10-yr low (some point to issues with surveys, others say that they are leading indicators). If companies cannot pass on their cost increases to consumers, their profit MARGINS may suffer. One interesting phenomenon is that high prices and product scarcities are pulling holiday SALES FORWARD. So, there may be bad news on retail later in 2021/Q4 or 2022/Q1. The notion of TRANSITORY inflation is also becoming shaky, and more people are now expecting inflation above 3%, not just above 2% (Fed objective).
Pg 33: INCOME. Global DIVIDENDS were at record levels in Q3 (+19.5% y-o-y; US +10%, UK +90%, EMs +31%), and more of the same is expected for Q4, all of 2021 (+2%), and that should also continue in 2022. In the US, dividends were cut in some industries (energy, mining, transports, entertainment, financials, etc) during the pandemic but it was a different matter in Europe where dividends cuts were widespread due to regulatory mandates. EQUITY INCOME investors are benefitting from current-dividends and dividend-growth (note that
%TR = %Dividend_yield + %Dividend_growth + %Change_in_P/D).
Pg 70: OTHER VOICES. Frank McCOURT, McCourt Global (social impact investing), Unfinished (2020; technology, social-media, economy projects), Project Liberty (2021; digital transformations, open-source DSNP, etc). Governments and companies are at odds over tech and social-media regulations related to data ownership, user privacy, flow of information, etc. But they are focusing on fixing old digital networks that are outdated and broken. Profit motives have led to concentration of power in a few corporate hands and have often led to harmful social results. Proposed is a new Internet architecture (DSNP, etc) with goals of open-source, open-access, social equity and common good. The individuals will then be in control of their own data and privacy and will derive the related benefits (instead of a handful of powerful companies now). This will require cooperation among governments, companies, technologists and social scientists. (This opinion piece has lot of big ideas and generalities, and one has to look at what billionaire McCourt (real estate development, parking lots, sports) has been doing through his investments, businesses, foundations, institutes).
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
REVIEW. Durational Capital is buying out Casper Sleep (February 2020 IPO at $12) at $6.90/share. Casper pioneered direct-to-consumer model for mattresses, and was a Unicorn for a while, but it couldn’t make it as a public company.
PREVIEW. All the UN COP26 got on COAL was phase-down, not phase-out, due to opposition from China, India, the US. Globally, 35% of power is produced from coal now and that may go down to 5% by 2050. High oil and gas prices now are making it difficult not to use cheap (but dirty) coal. Stocks have sold off (BTU, ARCH); VanEck shut its coal ETF in December.
DATA THIS WEEK. Existing home sales on MONDAY; manufacturing PMI, services PMI on TUESDAY; Q3 GDP (2nd est), durable goods orders, personal income and spending, wholesale inventories, new home sales on WEDNESDAY.
CLOSED. US stocks and bonds on THURSDAY; US stocks close early at 1:00 PM and bonds at 2:00 PM (Eastern times) so that you can logoff from here and GO SHOPPING.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Dominion Energy (D; yield 3.4%, was cut last year; fwd P/E 18.3; regulated businesses (90%; conventional and alternative energy under the VA Clean Economy Act) as well as unregulated businesses (10%); committed to ESG and net-zero carbon by 2050 and future capex plan show that; pg 14);
Bitcoin mining stocks (Core Scientific/XPDI (planned SPAC merger); RIOT (in Rockdale, TX using old Alcoa/AA facilities and infrastructure), MARA (under SEC investigation related to restricted shares), SDIG (uses toxic coal waste for energy); pg 16);
small-cap manufacturer LCI/Lippert Group (LCII; yield 2.3% (unusual for SC); fwd P/E 12.1; brands Taylor Made boat parts, Thomas Payne RV furniture; OEM business (80%) and aftermarket business (20%); supply-chain disruptions; growing by acquisitions, CURT Group (2019); pg 27).
BEARISH. See other stories.
Pg 12: FOLLOWUP. Macy’s/M remains attractive. It is spinning off its digital business. Shoppers are coming back to stores and malls. It is reevaluating previously announced store closures. Activist Jena Partners is involved. (Basically, retail was terrible pre-pandemic due to Amazon/AMZN factor, and pandemic killed many weak stores, but most retail survivors are doing great now)
Pg 28: FUNDS. Bill (father) and Cole (son) SMEAD co-manage concentrated value SMVLX. Their theme is that millennials will behave almost like boomers when it comes to investing and finance – a pattern they have observed within their large family. Fund invests in essential businesses that may be out of favor temporarily – malls, homebuilders, financials, energy, etc.
Pg 30: CRYPTOS in FUNDS. While the SEC has not approved a physical-crypto (a oxymoron?) ETF, but only futures-based crypto ETFs, there are no restrictions on mutual funds owning cryptos (physical or futures). All they need is a revised prospectus with disclosures. Examples include bond BASIX; commodities GLDPX, GCC; stocks ARKW, KMKNX, APPLX, FOMO, etc. (This looks like a loophole. When do minor crypto holding in mutual funds turn into major holdings?)
Pg 31: TECH TRADER. Tech selloff due to supply-chain disruptions is creating buying opportunities (CSCO, AAPL, DELL, HPQ, etc). Beware whether the issues are transitory (e.g. for for IT infrastructure) or permanently lost sales (e.g. for consumer electronics holiday gifts).
Pg 32: ECONOMY. Consumer SPENDING, retail SALES (nominal) and INFLATION are all rising, but the UNIT sales and GDP are not rising as fast. The UM CONSUMER CONFIDENCE fell to 10-yr low (some point to issues with surveys, others say that they are leading indicators). If companies cannot pass on their cost increases to consumers, their profit MARGINS may suffer. One interesting phenomenon is that high prices and product scarcities are pulling holiday SALES FORWARD. So, there may be bad news on retail later in 2021/Q4 or 2022/Q1. The notion of TRANSITORY inflation is also becoming shaky, and more people are now expecting inflation above 3%, not just above 2% (Fed objective).
Pg 33: INCOME. Global DIVIDENDS were at record levels in Q3 (+19.5% y-o-y; US +10%, UK +90%, EMs +31%), and more of the same is expected for Q4, all of 2021 (+2%), and that should also continue in 2022. In the US, dividends were cut in some industries (energy, mining, transports, entertainment, financials, etc) during the pandemic but it was a different matter in Europe where dividends cuts were widespread due to regulatory mandates. EQUITY INCOME investors are benefitting from current-dividends and dividend-growth (note that
%TR = %Dividend_yield + %Dividend_growth + %Change_in_P/D).
Pg 70: OTHER VOICES. Frank McCOURT, McCourt Global (social impact investing), Unfinished (2020; technology, social-media, economy projects), Project Liberty (2021; digital transformations, open-source DSNP, etc). Governments and companies are at odds over tech and social-media regulations related to data ownership, user privacy, flow of information, etc. But they are focusing on fixing old digital networks that are outdated and broken. Profit motives have led to concentration of power in a few corporate hands and have often led to harmful social results. Proposed is a new Internet architecture (DSNP, etc) with goals of open-source, open-access, social equity and common good. The individuals will then be in control of their own data and privacy and will derive the related benefits (instead of a handful of powerful companies now). This will require cooperation among governments, companies, technologists and social scientists. (This opinion piece has lot of big ideas and generalities, and one has to look at what billionaire McCourt (real estate development, parking lots, sports) has been doing through his investments, businesses, foundations, institutes).
(EXTRAS from online Friday that didn’t make the weekend paper version)
None