Post by Admin/YBB on Aug 6, 2022 10:09:11 GMT -6
Pg 10-11.
REVIEW. Thoma Bravo (private) is on buying spree (Anaplan, Bottomline Technologies, SailPoint Technologies, etc) and the most recent purchase is identity-software firm PING (09/2019 IPO). Rivals OKTA and FORG moved up a bit in sympathy.
PREVIEW. BANKS are awash in deposits, so don’t be surprised by their lousy deposit deals. Moreover, they are raising lending rates. Some banks may offer quick deals on higher deposits or brokered CDs (but if you wait or hesitate, those would be gone). However, online-only banks (ALLY, Marcus/GS, Chime, etc) are keeping up with 1.5-2.0% savings rates (and CDs) due to intense competition. (Alternatives include money-market funds and T-Bills).
DATA THIS WEEK: Business optimism index, productivity on TUESDAY; CPI (+8.7% est; core +6.1% est), wholesale inventories, Treasury budget on WEDNESDAY; PPI (+10.4% est; core +7.7% est) on THURSDAY; UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. PayPal (PYPL; fwd P/E 21; buybacks; new CFO JORGENSEN, CEO SCHULMAN has been CEO since 2014 spinoff from EBAY; now attractive after a brutal selloff after Summer 2021 peak (pandemic boost to e-commerce that faded); activist Elliott is involved with 2% stake; focusing on core businesses (PayPal, Venmo, Braintree, online checkouts) and profitable growth, not on becoming a super-App; pg 14).
BEARISH. See other stories.
Pg 12: Blackstone/BX private BREIT (unlisted, so bought from brokers/advisors) now has gross assets $116 billion, net assets $68 billion, yield 4.5% (really, distribution that is ROC), high ER 1.25% plus incentive fees of 12.5% of returns over 5% (paid in-kind), minimum $2.5K, net loss but cash flow positive. The NAV based on periodic assessment of properties is rising so far, but the publicly traded REITs such as VNQ have sold off. Redemptions are limited to 2% of assets monthly or 5% of assets quarterly. Recently, the purchases and redemptions have been netting to zero, but that may change to net outflows. Be careful. (TIAA Real Estate Account VA is a similar product but its distinguishing features are quarterly redemptions of any amounts and Liquidity Guarantee by TIAA).
Pg 15: China huffed and puffed as Speaker Nancy PELOSI passed through Taiwan. Oh, and China sanctioned her and her husband. China is also conducting military drills around Taiwan and took other toothless actions. Of course, there is heightened risk of China-Taiwan conflict (but will China destroy itself like Russia did over Ukraine?). Taiwan manufactures 90% of world’s advanced chips (TSM is the largest global chips-foundry) and S Korea is a very distant 2nd with only 8%; the rest of the world clocks in at a big 2%. The US CHIPS and Science Act has $50 billion to boost domestic chip R&D and production.
Pg 21. Robo-Advisors - Barron's Rankings, 2022
www.barrons.com/articles/the-best-robo-advisors-barrons-annual-ranking-51659712291?mod=hp_DAY_Theme_1_1
ybbpersonalfinance.proboards.com/post/732/thread
Overall Ranking: #1-SoFi, #2-Wealthfront/UBS, #3-Fidelity, #4-SigFig, #5-Merrill Edge, #6-Personal Capital/Empower, #7-Vanguard, #8-Betterment, #9-Schwab, #10-US Bank, #11-Morgan Stanley (includes E*Trade), #12-Wells Fargo, #13-Ally, #14-Acorns, #15-JP Morgan Chase
Digital Advice by Firm AUMs: #1-Edelman Financial Engines, #2-Vanguard, #3-Morningstar, #4-Fidelity, #5-Schwab, #6-Betterment, #7-Wealthfront/UBS, #8-Personal Capital/Empower, #9-TD Ameritrade/Schwab, #10-Guided Choice, #11-Bloom. Total industry AUM $987.6 billion.
Also mentioned are Best Overall (SoFi), for digital financial planning (Personal Capital/Empower), for 1st timers (Betterment), for complex financial planning (Vanguard).
There are several variations - digital-only, digital+ with some personalization/customization (menu-based) and limited support, tax-loss harvesting.
Related developments include direct-indexing, ESG, mobile apps.
Pg 24, FOLLOW UP. After recent poor performance and outflows, the ESG funds are playing defense. Even BlackRock/BLK was making less ESG noises. Backlash is causing a rethinking, especially on tech overweight and energy underweight. The SEC is also reviewing ESG claims, disclosures, and marketing. But this reexamination of ESG may be good long-term.
Pg 25: Gentry LEE (CEO/CIO/portfolio manager) and Alan CHRISTENSEN (Fayez Sarofim & Co; founder Fayez recently passed away at 93 and son Christopher is now Chairman) of global growth PGROX (also US blue-chip DGAGX) look for high-quality LC growth with competitive advantages. Fund is concentrated with 40-60 holdings, turnover 7%, ER 1.14% and is no-load/NTF at Fidelity and Schwab. Potential new additions to portfolio are watched over time.
Pg 27: INCOME. Higher yields are available OVERSEAS: UK 4%, Europe 3.4%, EMs 3.1%, Japan 2% vs US 1.6%. One reason is that foreign indexes have more cyclicals than the US with more techs. But foreign dividends have higher risks of cuts. Manager of GSAKX is cited.
Pg 28, ECONOMY. People are confused by the Fed QT (or, -QE). Some even wonder if QT has started – yes, in June. Right now, the roll-offs are at a half-pace, the MBS at -17.5 billion/mo, the Treasuries at -30 billion/mo but those will become full strength in September (to -35 billion/mo and -60 billion/mo, respectively). So, why haven’t the Fed balances of MBS declined, although the Treasury balances have declined some? Well, the Fed allows 3-mo settlements for MBS bought to lessen any housing market disruptions, so yes, the MBS declines are surely coming. Moreover, any mortgage paydowns are being reinvested. So, the QT will become more visible after September. But remember that QT has been tried only once before and it amounts to an effective rate hike of an unknown amount, so the Fed is being cautious. Also, dollar strength had the effect of an additional rate hike of unknown amount. Remember all this going on in the background as most people are focused only on fed fund rate hikes. Also, that the QE had an effect, so will the reverse QE, or QT.
Pg 29, TECH TRADER. Apple/AAPL ruined the ad-party for almost everybody else (META, YouTube/GOOGL, SNAP, NFLX, etc) by its default PRIVACY SETTING changes, but it hasn’t capitalized on that itself. But now AAPL wants to move into the ad-space and has been hiring ad-managers for its demand-side-platform (DSP; others already have their DSPs). APPL is promising to be innovative, forward-thinking, respectful of privacy, blah, blah and is taking long-term view of 5-10-20 years (of course, it has its own OS and own App Store; and it waited long enough so that others cannot cry foul but they are now stunned).
Pg 30: Eli SALZMANN, Neuberger Berman, firm Managing Director and Comanager of LC Value NBPIX (NPNAX is no-load/NTF at Fidelity and Schwab). He is OK with dogs (companies, sectors, industries) with no momentum that are about to turnaround due to some catalyst, a classic deep-value approach. He likes energy (XOM, CVX, COP), pharma (PFE), banks (JPM), metals/mining (FCX); he is underweight in utilities, healthcare, consumer-staples. His overall positioning is defensive. Investors should think differently than fund managers and may want to hide in defensive utilities and consumer-staple (PG). Soft-landing isn’t going to happen – in prior times (mid-1908s, mid-1990s), there were disinflationary forces that allowed soft-landing, but now is different (inflation and slowdown). The Fed is reactive and will overshoot on tightening. His probability for recession is 100% (for emphasis). This is no longer a risk-on environment.
Pg 62, OTHER VOICES. Julia POLLAK, ZipRecruiter. The LABOR market says no RECESSION. Labor market is firing on all cylinders; the UNEMPLOYMENT rate is near 50-yr low. In recessions, the GDP decline is accompanied by rising unemployment (OKUN’s law, 1962, provides a quantitative relationship). And rising unemployment may not mean mass layoffs but just that jobs become harder to find and unemployment duration lengthens. While JOLTS reports now show a decline in the number of openings, those are still well above the numbers of unemployed and also the pre-pandemic levels. Some job losses now are in selected sectors (tech, real estate, e-commerce), and because those sectors over-hired in anticipation of recovery, not widespread as in recessions. Recession sensitive sectors (restaurants, hotels, airlines) are not showing declines. Rise in underemployment has been tiny. Wage growth has remained strong. Labor-force participation has been flat. She is up to her 8th reason! Another thing interesting is that the article accounts for news as of Friday – normally, these pieces/essays/opinions are submitted weeks ahead and picked by the Editor as needed.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. Thoma Bravo (private) is on buying spree (Anaplan, Bottomline Technologies, SailPoint Technologies, etc) and the most recent purchase is identity-software firm PING (09/2019 IPO). Rivals OKTA and FORG moved up a bit in sympathy.
PREVIEW. BANKS are awash in deposits, so don’t be surprised by their lousy deposit deals. Moreover, they are raising lending rates. Some banks may offer quick deals on higher deposits or brokered CDs (but if you wait or hesitate, those would be gone). However, online-only banks (ALLY, Marcus/GS, Chime, etc) are keeping up with 1.5-2.0% savings rates (and CDs) due to intense competition. (Alternatives include money-market funds and T-Bills).
DATA THIS WEEK: Business optimism index, productivity on TUESDAY; CPI (+8.7% est; core +6.1% est), wholesale inventories, Treasury budget on WEDNESDAY; PPI (+10.4% est; core +7.7% est) on THURSDAY; UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. PayPal (PYPL; fwd P/E 21; buybacks; new CFO JORGENSEN, CEO SCHULMAN has been CEO since 2014 spinoff from EBAY; now attractive after a brutal selloff after Summer 2021 peak (pandemic boost to e-commerce that faded); activist Elliott is involved with 2% stake; focusing on core businesses (PayPal, Venmo, Braintree, online checkouts) and profitable growth, not on becoming a super-App; pg 14).
BEARISH. See other stories.
Pg 12: Blackstone/BX private BREIT (unlisted, so bought from brokers/advisors) now has gross assets $116 billion, net assets $68 billion, yield 4.5% (really, distribution that is ROC), high ER 1.25% plus incentive fees of 12.5% of returns over 5% (paid in-kind), minimum $2.5K, net loss but cash flow positive. The NAV based on periodic assessment of properties is rising so far, but the publicly traded REITs such as VNQ have sold off. Redemptions are limited to 2% of assets monthly or 5% of assets quarterly. Recently, the purchases and redemptions have been netting to zero, but that may change to net outflows. Be careful. (TIAA Real Estate Account VA is a similar product but its distinguishing features are quarterly redemptions of any amounts and Liquidity Guarantee by TIAA).
Pg 15: China huffed and puffed as Speaker Nancy PELOSI passed through Taiwan. Oh, and China sanctioned her and her husband. China is also conducting military drills around Taiwan and took other toothless actions. Of course, there is heightened risk of China-Taiwan conflict (but will China destroy itself like Russia did over Ukraine?). Taiwan manufactures 90% of world’s advanced chips (TSM is the largest global chips-foundry) and S Korea is a very distant 2nd with only 8%; the rest of the world clocks in at a big 2%. The US CHIPS and Science Act has $50 billion to boost domestic chip R&D and production.
Pg 21. Robo-Advisors - Barron's Rankings, 2022
www.barrons.com/articles/the-best-robo-advisors-barrons-annual-ranking-51659712291?mod=hp_DAY_Theme_1_1
ybbpersonalfinance.proboards.com/post/732/thread
Overall Ranking: #1-SoFi, #2-Wealthfront/UBS, #3-Fidelity, #4-SigFig, #5-Merrill Edge, #6-Personal Capital/Empower, #7-Vanguard, #8-Betterment, #9-Schwab, #10-US Bank, #11-Morgan Stanley (includes E*Trade), #12-Wells Fargo, #13-Ally, #14-Acorns, #15-JP Morgan Chase
Digital Advice by Firm AUMs: #1-Edelman Financial Engines, #2-Vanguard, #3-Morningstar, #4-Fidelity, #5-Schwab, #6-Betterment, #7-Wealthfront/UBS, #8-Personal Capital/Empower, #9-TD Ameritrade/Schwab, #10-Guided Choice, #11-Bloom. Total industry AUM $987.6 billion.
Also mentioned are Best Overall (SoFi), for digital financial planning (Personal Capital/Empower), for 1st timers (Betterment), for complex financial planning (Vanguard).
There are several variations - digital-only, digital+ with some personalization/customization (menu-based) and limited support, tax-loss harvesting.
Related developments include direct-indexing, ESG, mobile apps.
Pg 24, FOLLOW UP. After recent poor performance and outflows, the ESG funds are playing defense. Even BlackRock/BLK was making less ESG noises. Backlash is causing a rethinking, especially on tech overweight and energy underweight. The SEC is also reviewing ESG claims, disclosures, and marketing. But this reexamination of ESG may be good long-term.
Pg 25: Gentry LEE (CEO/CIO/portfolio manager) and Alan CHRISTENSEN (Fayez Sarofim & Co; founder Fayez recently passed away at 93 and son Christopher is now Chairman) of global growth PGROX (also US blue-chip DGAGX) look for high-quality LC growth with competitive advantages. Fund is concentrated with 40-60 holdings, turnover 7%, ER 1.14% and is no-load/NTF at Fidelity and Schwab. Potential new additions to portfolio are watched over time.
Pg 27: INCOME. Higher yields are available OVERSEAS: UK 4%, Europe 3.4%, EMs 3.1%, Japan 2% vs US 1.6%. One reason is that foreign indexes have more cyclicals than the US with more techs. But foreign dividends have higher risks of cuts. Manager of GSAKX is cited.
Pg 28, ECONOMY. People are confused by the Fed QT (or, -QE). Some even wonder if QT has started – yes, in June. Right now, the roll-offs are at a half-pace, the MBS at -17.5 billion/mo, the Treasuries at -30 billion/mo but those will become full strength in September (to -35 billion/mo and -60 billion/mo, respectively). So, why haven’t the Fed balances of MBS declined, although the Treasury balances have declined some? Well, the Fed allows 3-mo settlements for MBS bought to lessen any housing market disruptions, so yes, the MBS declines are surely coming. Moreover, any mortgage paydowns are being reinvested. So, the QT will become more visible after September. But remember that QT has been tried only once before and it amounts to an effective rate hike of an unknown amount, so the Fed is being cautious. Also, dollar strength had the effect of an additional rate hike of unknown amount. Remember all this going on in the background as most people are focused only on fed fund rate hikes. Also, that the QE had an effect, so will the reverse QE, or QT.
Pg 29, TECH TRADER. Apple/AAPL ruined the ad-party for almost everybody else (META, YouTube/GOOGL, SNAP, NFLX, etc) by its default PRIVACY SETTING changes, but it hasn’t capitalized on that itself. But now AAPL wants to move into the ad-space and has been hiring ad-managers for its demand-side-platform (DSP; others already have their DSPs). APPL is promising to be innovative, forward-thinking, respectful of privacy, blah, blah and is taking long-term view of 5-10-20 years (of course, it has its own OS and own App Store; and it waited long enough so that others cannot cry foul but they are now stunned).
Pg 30: Eli SALZMANN, Neuberger Berman, firm Managing Director and Comanager of LC Value NBPIX (NPNAX is no-load/NTF at Fidelity and Schwab). He is OK with dogs (companies, sectors, industries) with no momentum that are about to turnaround due to some catalyst, a classic deep-value approach. He likes energy (XOM, CVX, COP), pharma (PFE), banks (JPM), metals/mining (FCX); he is underweight in utilities, healthcare, consumer-staples. His overall positioning is defensive. Investors should think differently than fund managers and may want to hide in defensive utilities and consumer-staple (PG). Soft-landing isn’t going to happen – in prior times (mid-1908s, mid-1990s), there were disinflationary forces that allowed soft-landing, but now is different (inflation and slowdown). The Fed is reactive and will overshoot on tightening. His probability for recession is 100% (for emphasis). This is no longer a risk-on environment.
Pg 62, OTHER VOICES. Julia POLLAK, ZipRecruiter. The LABOR market says no RECESSION. Labor market is firing on all cylinders; the UNEMPLOYMENT rate is near 50-yr low. In recessions, the GDP decline is accompanied by rising unemployment (OKUN’s law, 1962, provides a quantitative relationship). And rising unemployment may not mean mass layoffs but just that jobs become harder to find and unemployment duration lengthens. While JOLTS reports now show a decline in the number of openings, those are still well above the numbers of unemployed and also the pre-pandemic levels. Some job losses now are in selected sectors (tech, real estate, e-commerce), and because those sectors over-hired in anticipation of recovery, not widespread as in recessions. Recession sensitive sectors (restaurants, hotels, airlines) are not showing declines. Rise in underemployment has been tiny. Wage growth has remained strong. Labor-force participation has been flat. She is up to her 8th reason! Another thing interesting is that the article accounts for news as of Friday – normally, these pieces/essays/opinions are submitted weeks ahead and picked by the Editor as needed.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).