Post by Admin/YBB on Feb 6, 2021 13:23:35 GMT -6
[Italics within the brackets are my additions/elaborations]
Pg 10-11: Fed Chair Powell’s tele-speech at Economic Club of NY on Wednesday.
Exxon Mobil/XOM and Chevron/CVX discussed merger last year. But their merger seems less logical and likely now.
Under Armour/UA is ending its licensing deal with NFL and reviewing individual deals with players. It is also exiting contracts with MLB and major college sports. Some analysts upgraded UA.
Data this week: Small business optimism index on Tuesday; CPI, wholesale inventories on Wednesday; weekly initial jobless claims on Thursday; UM consumer sentiment index on Friday.
www.barrons.com/magazine?mod=BOL_TOPNAV
Bullish: Hilton Worldwide [HLT; debt/EBITDA (2020) 5.8 (high); EV/EBITDA (2022) 17; asset-lite model well suited for post-pandemic time; pre-pandemic, 75% of revenues were from franchising with franchisees paying base fees plus % of gross revenues and profits; mix of brands, luxury (Waldorf Astoria), middle-market (Hilton), budget (Hilton Garden Inns, Hampton, Home2 Suites), etc; 2017 spinoffs PK, HGV; pg 14]; Casey’s General Stores [CASY; fwd P/E 24; fwd EV/EBITDA 11; loyalty program; high margins due to self-distribution network for merchandise and fuel; 4th largest convenience-store chain; 5th largest pizza seller (!); 2,200 stores in 16 states; growing via acquisitions, most recently Bucky’s/Buchanan Energy; market-cap $7 billion, so may become an acquisition target itself; pg 16].
Bearish: Robinhood [bearish in advance of possible IPO in Q2; founded in 2013; revenue growth with losses; 80% revenue from payments-for-order flow, 1/3rd from stocks, 2/3rd from options; SEC fine on related nondisclosures; 15 million accounts with average balance $5K; Super Bowl ad; Congressional hearings soon on app-trading mania in low-quality small-cap stocks and options; backlash on social-media on recent actions; pg 12].
Pg 13: 100 Years of Barron’s series points out other spectacular short squeezes. Stutz Motor in 1920; short-squeeze was run by founder/owner and at the end both he and his company were bankrupt. Piggly Wiggly in 1923 [today owned by C&S Wholesale Grocers]; started the 1st self-service store model in 1916; founder/owner Clarence Saunders ran a short-squeeze with borrowed money and ended up owning almost 100% of shares outstanding but then he lost control of the company. The recent short-squeezes [GME, AMC, etc] were different in that they were run by thousands/millions of app-trading retail investors.
Pg 18: Regulatory scrutiny by various federal agencies [SEC, FINRA, CFPB, DOL, etc] will soon be for cryptocurrencies; newer app/online securities brokers; commission-free trade disclosures; Regulation Best Interest [Reg BI], company proxy rules; pension investment rules; executive incentive compensation; climate risks; company disclosures including for ESG; consumer and investor protections; pandemic related issues; oil/gas industry; etc.
Pg 19: Income from utilities: AWK, ATO, CMS, DTE, SRE, NEE; ETF XLU.
Pg 21: Platinum is at half of its peak more than a decade ago. It is lagging gold, silver, palladium, rhodium. Its demand from catalytic converters for diesel engines fell [remember diesel-gate scandals?]. But it is also used in fuel-cells for EVs. Platinum mining is difficult and much of it comes from unstable South Africa. Platinum producers are at depressed valuations [ANGPY, IMPUY, SBSW]. Physical ETFs are PPLT, PLTM [tiny].
Stories related to Alzheimer cover story [Part 1]
Pg 25: Jason Karlawish, Penn Memory Center. New book, The Problem of Alzheimer’s, 2021. Alzheimer’s isn’t just a medical problem but a humanitarian problem that involves diagnosis, drugs, treatment, long-term care and support. Different approaches are required in the first 2/3rd and the latter 1/3rd of its course. While there is no effective drugs or treatments, early diagnosis allows steps to slow its progression. Better tax & insurance policies are also needed for the vast middle class as the rich can take care of themselves and some supports do exist for the poor. The pandemic has revealed deficiencies of the healthcare system and long-term care facilities.
Financial advisors may be the first to spot dementia in their clients. They are external observers and people with memory disorders have early troubles with financial matters. It is also important for financial advisor to have a trusted contact on file who can be alerted. The first line of defense is also taking proper financial steps as much the long-term care related expenses [home care or assisted-living or nursing homes] are not covered by health insurance [private or group or Medicare]. Long-term care insurance [LTCI] may provide some coverage but many don’t have that. Financial needs of the patients may have to be balanced by those of the family members. There should also be difficult but specific discussions about end-of-life care.
Biogen/BIIB is developing Alzheimer drug aducanumab [Japanese Eisai/ESALY is a partner] that is under FDA review for a while [2+ years!]. There is lot of unusual back-and-forth between BIIB and FDA because there is no good alternative drug. BIIB has poor prospects without aducanumab approval as its other drugs face tough competition from other drugs or generics. Eli Lilly/LLY is developing donanemab that is based on principles similar to aducanumab.
Pg 31: Chris Pearson and George Smith of small-cap DSCPX [ER 0.97%] look for companies with owner-operator executives. Fund Is concentrated with 30-35 holdings; 42.2% in top 10. It has 29% in consumer-discretionary, only 4% in tech, 0% in healthcare and avoids commodity-related cyclical sectors such as energy and mining.
Pg 33: More than 2 dozen active funds in 2020 returned 100%+ vs R3000 – very unusual in that no fund did that in the past decade [or ever? Well, if Barron’s doesn’t know or cannot figure it out, it probably never happened]. These funds [from ARK Investments, MS, Baron Capital, etc] included concentrated growth funds with a few holdings that multiplied many times in 2020.
Pg 34: Amazon/AMZN investors were surprised by Jeff Bezo’s announcement to step down as CEO; he will remain as Executive Chairman. Andy Jassy, the AWS Head will become the CEO. There are several other management changes, but Amazon’s post-Bezos future looks bright.
Pg 36: Savita Subramanian, Bank of America/BAC. She likes cyclicals [industrials, financials, energy], healthcare and small-caps. Her 2021 target for SP500 is only 3,800 [we are above it already]. Economy will get boost from low rates and more stimulus but all that is priced in the market. Speculation in low-quality small-caps shows that the market has decoupled from fundamentals. Risks are unexpected increases in interest rates [her projected 10-yr rate is 1.75% for 2021] and inflation. Low rates are driving investors into riskier bonds and dividend stocks. Recent upside earnings surprises being met with negative reactions remind her of early 2000. BoA sell-side indicator is sending a sell signal. Areas that did well in 2020 may do poorly in 2021 as the economy reopens. Taxes and regulations may hurt techs. ESG considerations will continue to grow. She is also BoA’s global head for ESG, but that doesn’t distract her from attractive opportunities in energy – renewable energy will become more important later, but we also need to keep lights on now. Several energy companies are moving in the right direction.
Pg 38: Poor jobs report showed that the US economic recovery is stalling. There was weakness in construction, manufacturing, state & local government sectors. Those unemployed for 27+ weeks rose to 40%. The total labor pool shrank [as did the population]. On the positive side, job losses in leisure, hospitality, personal services bottomed; part-time and temporary employment rose; job gains were seen in higher-paying financial and tech sectors. Stimulus 3 may arrive just in time.
Extras from online Friday that didn’t make the weekend paper version
FR/BL funds [BKLN, etc] have had strong inflows and some of those came from HY funds [HYG, etc]. FR/BL CEFs [with leverage and fixed number of shares] have done better than OEFs & ETFs.
Pg 10-11: Fed Chair Powell’s tele-speech at Economic Club of NY on Wednesday.
Exxon Mobil/XOM and Chevron/CVX discussed merger last year. But their merger seems less logical and likely now.
Under Armour/UA is ending its licensing deal with NFL and reviewing individual deals with players. It is also exiting contracts with MLB and major college sports. Some analysts upgraded UA.
Data this week: Small business optimism index on Tuesday; CPI, wholesale inventories on Wednesday; weekly initial jobless claims on Thursday; UM consumer sentiment index on Friday.
www.barrons.com/magazine?mod=BOL_TOPNAV
Bullish: Hilton Worldwide [HLT; debt/EBITDA (2020) 5.8 (high); EV/EBITDA (2022) 17; asset-lite model well suited for post-pandemic time; pre-pandemic, 75% of revenues were from franchising with franchisees paying base fees plus % of gross revenues and profits; mix of brands, luxury (Waldorf Astoria), middle-market (Hilton), budget (Hilton Garden Inns, Hampton, Home2 Suites), etc; 2017 spinoffs PK, HGV; pg 14]; Casey’s General Stores [CASY; fwd P/E 24; fwd EV/EBITDA 11; loyalty program; high margins due to self-distribution network for merchandise and fuel; 4th largest convenience-store chain; 5th largest pizza seller (!); 2,200 stores in 16 states; growing via acquisitions, most recently Bucky’s/Buchanan Energy; market-cap $7 billion, so may become an acquisition target itself; pg 16].
Bearish: Robinhood [bearish in advance of possible IPO in Q2; founded in 2013; revenue growth with losses; 80% revenue from payments-for-order flow, 1/3rd from stocks, 2/3rd from options; SEC fine on related nondisclosures; 15 million accounts with average balance $5K; Super Bowl ad; Congressional hearings soon on app-trading mania in low-quality small-cap stocks and options; backlash on social-media on recent actions; pg 12].
Pg 13: 100 Years of Barron’s series points out other spectacular short squeezes. Stutz Motor in 1920; short-squeeze was run by founder/owner and at the end both he and his company were bankrupt. Piggly Wiggly in 1923 [today owned by C&S Wholesale Grocers]; started the 1st self-service store model in 1916; founder/owner Clarence Saunders ran a short-squeeze with borrowed money and ended up owning almost 100% of shares outstanding but then he lost control of the company. The recent short-squeezes [GME, AMC, etc] were different in that they were run by thousands/millions of app-trading retail investors.
Pg 18: Regulatory scrutiny by various federal agencies [SEC, FINRA, CFPB, DOL, etc] will soon be for cryptocurrencies; newer app/online securities brokers; commission-free trade disclosures; Regulation Best Interest [Reg BI], company proxy rules; pension investment rules; executive incentive compensation; climate risks; company disclosures including for ESG; consumer and investor protections; pandemic related issues; oil/gas industry; etc.
Pg 19: Income from utilities: AWK, ATO, CMS, DTE, SRE, NEE; ETF XLU.
Pg 21: Platinum is at half of its peak more than a decade ago. It is lagging gold, silver, palladium, rhodium. Its demand from catalytic converters for diesel engines fell [remember diesel-gate scandals?]. But it is also used in fuel-cells for EVs. Platinum mining is difficult and much of it comes from unstable South Africa. Platinum producers are at depressed valuations [ANGPY, IMPUY, SBSW]. Physical ETFs are PPLT, PLTM [tiny].
Stories related to Alzheimer cover story [Part 1]
Pg 25: Jason Karlawish, Penn Memory Center. New book, The Problem of Alzheimer’s, 2021. Alzheimer’s isn’t just a medical problem but a humanitarian problem that involves diagnosis, drugs, treatment, long-term care and support. Different approaches are required in the first 2/3rd and the latter 1/3rd of its course. While there is no effective drugs or treatments, early diagnosis allows steps to slow its progression. Better tax & insurance policies are also needed for the vast middle class as the rich can take care of themselves and some supports do exist for the poor. The pandemic has revealed deficiencies of the healthcare system and long-term care facilities.
Financial advisors may be the first to spot dementia in their clients. They are external observers and people with memory disorders have early troubles with financial matters. It is also important for financial advisor to have a trusted contact on file who can be alerted. The first line of defense is also taking proper financial steps as much the long-term care related expenses [home care or assisted-living or nursing homes] are not covered by health insurance [private or group or Medicare]. Long-term care insurance [LTCI] may provide some coverage but many don’t have that. Financial needs of the patients may have to be balanced by those of the family members. There should also be difficult but specific discussions about end-of-life care.
Biogen/BIIB is developing Alzheimer drug aducanumab [Japanese Eisai/ESALY is a partner] that is under FDA review for a while [2+ years!]. There is lot of unusual back-and-forth between BIIB and FDA because there is no good alternative drug. BIIB has poor prospects without aducanumab approval as its other drugs face tough competition from other drugs or generics. Eli Lilly/LLY is developing donanemab that is based on principles similar to aducanumab.
Pg 31: Chris Pearson and George Smith of small-cap DSCPX [ER 0.97%] look for companies with owner-operator executives. Fund Is concentrated with 30-35 holdings; 42.2% in top 10. It has 29% in consumer-discretionary, only 4% in tech, 0% in healthcare and avoids commodity-related cyclical sectors such as energy and mining.
Pg 33: More than 2 dozen active funds in 2020 returned 100%+ vs R3000 – very unusual in that no fund did that in the past decade [or ever? Well, if Barron’s doesn’t know or cannot figure it out, it probably never happened]. These funds [from ARK Investments, MS, Baron Capital, etc] included concentrated growth funds with a few holdings that multiplied many times in 2020.
Pg 34: Amazon/AMZN investors were surprised by Jeff Bezo’s announcement to step down as CEO; he will remain as Executive Chairman. Andy Jassy, the AWS Head will become the CEO. There are several other management changes, but Amazon’s post-Bezos future looks bright.
Pg 36: Savita Subramanian, Bank of America/BAC. She likes cyclicals [industrials, financials, energy], healthcare and small-caps. Her 2021 target for SP500 is only 3,800 [we are above it already]. Economy will get boost from low rates and more stimulus but all that is priced in the market. Speculation in low-quality small-caps shows that the market has decoupled from fundamentals. Risks are unexpected increases in interest rates [her projected 10-yr rate is 1.75% for 2021] and inflation. Low rates are driving investors into riskier bonds and dividend stocks. Recent upside earnings surprises being met with negative reactions remind her of early 2000. BoA sell-side indicator is sending a sell signal. Areas that did well in 2020 may do poorly in 2021 as the economy reopens. Taxes and regulations may hurt techs. ESG considerations will continue to grow. She is also BoA’s global head for ESG, but that doesn’t distract her from attractive opportunities in energy – renewable energy will become more important later, but we also need to keep lights on now. Several energy companies are moving in the right direction.
Pg 38: Poor jobs report showed that the US economic recovery is stalling. There was weakness in construction, manufacturing, state & local government sectors. Those unemployed for 27+ weeks rose to 40%. The total labor pool shrank [as did the population]. On the positive side, job losses in leisure, hospitality, personal services bottomed; part-time and temporary employment rose; job gains were seen in higher-paying financial and tech sectors. Stimulus 3 may arrive just in time.
Extras from online Friday that didn’t make the weekend paper version
FR/BL funds [BKLN, etc] have had strong inflows and some of those came from HY funds [HYG, etc]. FR/BL CEFs [with leverage and fixed number of shares] have done better than OEFs & ETFs.