Post by Admin/YBB on Jun 8, 2024 7:35:34 GMT -6
Pg 9. PREVIEW & REVIEW (consolidated). 2024 Apple WWDC on MONDAY. FOMC Statement and Powell’s presser on WEDNESDAY.
DENIM is hot (pants, skirts, shirts, blouses, overalls) and that is benefiting retailers ANF, AEO, Free People, TJX, Old Navy/GAP; specialty retailers include LEVI (it patented and popularized jeans), KTB, Shein, Calvin Klein/PVH, H&M, Zara, RL.
DATA THIS WEEK. CPI (+3.4% yoy, core +3.5%) on WEDNESDAY; PPI on THURSDAY; UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Lockheed Martin (LMT; yield 2.7%; fwd P/E 17.7; buybacks; 2+ year worth of backlog; 75% of sales to the US Government; this defense stock has lagged for 5+ years and hasn’t benefitted much from geopolitical tensions; but the issues of supply-chain disruptions and uncertain defense spending are now behind; pg 13).
BEARISH. CEF Pershing Square USA (CEF PSUS with forthcoming IPO in July; ER 2%, waived for 12 months; it will hold only 10-12 US LC-growth stocks using “ACKMAN’s secret sauce”; it may develop discount soon after the IPO, so wait if interested; better may still be his overseas hedge-fund PSHZF at 25% discount and with fees of 1.5% + 16% of gains over high watermark; also forthcoming is 2025 IPO of Pershing Square Capital Management (PSCM), and in preparation, 10% stake has been sold to a group of investors that includes insurer ACGL; Bill Ackman is controversial with huge social-media following; Barron’s is generally positive on Ackman, but not on his new CEF PSUS, pg 10).
Pg 14: Possible CEO transitions will be at J.P. Morgan Chase/JPM (DIMON, 68, CEO 2006- ), BlackRock/BLK (FINK, 71, CEO 1988- ), Blackstone/BX (SCHWARZMAN, 77, 1985- ).
Pg 16: Not all ANNUITIES are safe. Risks of Advantage Capital Holdings (A-CAP) annuities are discussed. A-CAP is a holding company that owns or has stakes in several small insurers (Sentinel, Atlantic Coast; in-house reinsurer Haymarket). Its annuities are backed by portfolios that invest heavily in the related companies, so there are potential conflicts of interest. Many internal loans aren’t documented beyond internal records or are private-placements that require minimal public disclosures. A-CAP also uses a Bermuda-based reinsurer owned by Miami-based private investment company 777 Holdings; A-CAP has also made direct loans to 777. Then, its own reinsurer Haymarket has reinsured some insurance business from its own Sentinel, Atlantic Coast. There is a lawsuit against A.M. Best on potential rating downgrades – A.M. Best said in a court filing that A-CAP is using old A.M. Best ratings in misleading ways and those don’t really apply now, but its rating actions are on hold due to the pending lawsuit. A-CAP used aggressive marketing and sales incentives to issue $1.7 billion in annuities in 2023. The risk is that these illiquid, poorly documented underlying investments in related/linked entities may unravel if there are sudden large withdrawals. It’s not a good idea to rely on unfunded state insurance guarantees because the workouts of failed insurers are messy and take a long time (very unlike the fast workouts of banks under the FDIC insurance).
Pg 18: The $13.61 million ESTATE TAX EXEMPTION (basically, $27.22 million for couples), unless extended, will be cut in half in 2025. The top estate tax rate is 40%. There are several ways to lock-in these exemptions – irrevocable spousal lifetime access trusts (SLATs); preparing documents ahead and wait to see if the exemption will be extended, and if not, quickly implement the plans; couples using the maximum possible exemption for one spouse now, and let the other spouse deal with the issue later.
Pg 19, TECH TRADER. Apple/AAPL needs a miracle – it is now #3 in market-cap behind #2 NVDA. AI has affected these 2 companies quite differently. So, look for the keynote address by AAPL CEO Tim COOK on Monday, 1:00 PM Eastern. AAPL has been taking small incremental steps in AI, but its big AI vision remains to be seen (assuming that it has one). It may partner with OpenAI/MSFT on ChatGPT (GOOGL Gemini may be a natural choice, but the DOJ is already looking at AAPL and GOOGL deal on Search). AAPL Siri is no competition for ChatGPT, Gemini, etc. It may also go with a smaller, phone-based chatbot, rather than cloud-based chatbots. AAPL stock has rallied on expectation(s) of something big from WWDC, but there may be disappointment.
Pg 20, ECONOMY. The LABOR market remains strong. More jobs, wage gains and higher consumer spending will keep INFLATION sticky. The FED can just hold rates until its goal of 2% average inflation is reached eventually. The FOMC will provide some guidance on Wednesday.
Pg 21, FUNDS. TACTICAL ALLOCATION funds have been disappointing, but there are some winners. Featured is MCTOX (ER 1.92%) / MCTDX (ER 1.92%) that uses long-short strategies with ETFs, CEFs, stocks; it’s nondiversified. The ER is net of fee waivers but is still high because it includes expenses from borrowing and the ERs from underlying ETFs and CEFs. Day-trading (mentioned in Prospectus) and short-term trading cause crazy high turnovers. It avoided the hits in 2022; it’s Sharpe Ratio is good. (Inception date is 6/24/21, so it’s just showing up on some 3-yr screens) (TF at Fidelity, NTF at Schwab) Other TAA funds mentioned are LCORX, CTFAX, ETFAX, MDCEX, AHTPX, ETF CEFS. (By @lewisbraham at MFO)
Pg 50, INCOME. Several SMALL-CAPS pay good dividends and there is potential for some dividend-growth. 12 of the SP SC 600 stocks are among dividend Aristocrats. SCs are adversely affected by higher rates. They also have M&A potential. Mentioned are ABM, AWR, AVA, BMI, BRC, CWT, CPK, CBU, FELE, FUL, SJW, SCL; and ETFs DES, DGRS.
Pg 22, INTERVIEW/Q&A. Evan GREENBERG, CEO of Chubb/CB (global P&C insurer). Warren Buffett/BRK secretly accumulated 6% stake in CB (this is permitted by the SEC for influential investors). Father Maurice “Hank” GREEBERG (99) ran AIG, 1975-2004, and Ace Ltd 2004-2006 that was merged into CB. It doesn’t compromise underwriting for market share; it lets insurance novices do that. Higher rates have benefited insurers generally, and also their bond portfolios – CB has $140 billion in short-duration bonds. Insurers cover growing risks from climate, environment, natural disasters, litigations, etc. They rely on their own capital to some extent but transfer excess risks to reinsurers. Several wealthy customers and companies with strong financials can share some risks with their insurers – this is common in the high-end market that CB serves. Insurance markets in some states are very difficult and unprofitable, and several states are using last-resort insurance programs because many insurance companies have stopped writing new insurance. But make no mistakes about it – taxpayers will have to pay when there are underwriting losses in these state programs. So, it’s a social decision – allow higher rates now or subsidize from state funds later. He thinks that the US and China can coexist in trade even when there are cultural and political differences. Unfortunately, recent Chinese policies have been unfriendly for domestic and foreign businesses. In China, CB serves Chinese population that doesn’t have social safety nets and is underinsured. It also has a strong presence elsewhere in Asia.
Pg 51, RETIREMENT. 29% take SOCIAL SECURITY early at 62%, only 10% wait until 70. Despite all the analyses and spreadsheets, simple explanations are that (i) Many need them early, (ii) Some who don’t need them still like spare cash now for discretionary expenses while they are healthy (and (iii) Except for some survivor benefits, Social Security payments stop once one dies, so higher benefits later may not materialize.)
The supplement GUIDE TO WEALTH has Cover Story (see Part 1) and several features on financial careers by former college and professional sports players; sports collectibles; flood of money affecting young athletes. These are followed by state-by-state Top Advisor Directory, Top RIA Firms, and Top Advisory Teams.
NOTE. It’s very irritating that Barron’s has stopped mentioning TICKERS for most companies mentioned. I now have to look them up. Sometimes this takes time as there are similar names, especially for banks.
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
DENIM is hot (pants, skirts, shirts, blouses, overalls) and that is benefiting retailers ANF, AEO, Free People, TJX, Old Navy/GAP; specialty retailers include LEVI (it patented and popularized jeans), KTB, Shein, Calvin Klein/PVH, H&M, Zara, RL.
DATA THIS WEEK. CPI (+3.4% yoy, core +3.5%) on WEDNESDAY; PPI on THURSDAY; UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Lockheed Martin (LMT; yield 2.7%; fwd P/E 17.7; buybacks; 2+ year worth of backlog; 75% of sales to the US Government; this defense stock has lagged for 5+ years and hasn’t benefitted much from geopolitical tensions; but the issues of supply-chain disruptions and uncertain defense spending are now behind; pg 13).
BEARISH. CEF Pershing Square USA (CEF PSUS with forthcoming IPO in July; ER 2%, waived for 12 months; it will hold only 10-12 US LC-growth stocks using “ACKMAN’s secret sauce”; it may develop discount soon after the IPO, so wait if interested; better may still be his overseas hedge-fund PSHZF at 25% discount and with fees of 1.5% + 16% of gains over high watermark; also forthcoming is 2025 IPO of Pershing Square Capital Management (PSCM), and in preparation, 10% stake has been sold to a group of investors that includes insurer ACGL; Bill Ackman is controversial with huge social-media following; Barron’s is generally positive on Ackman, but not on his new CEF PSUS, pg 10).
Pg 14: Possible CEO transitions will be at J.P. Morgan Chase/JPM (DIMON, 68, CEO 2006- ), BlackRock/BLK (FINK, 71, CEO 1988- ), Blackstone/BX (SCHWARZMAN, 77, 1985- ).
Pg 16: Not all ANNUITIES are safe. Risks of Advantage Capital Holdings (A-CAP) annuities are discussed. A-CAP is a holding company that owns or has stakes in several small insurers (Sentinel, Atlantic Coast; in-house reinsurer Haymarket). Its annuities are backed by portfolios that invest heavily in the related companies, so there are potential conflicts of interest. Many internal loans aren’t documented beyond internal records or are private-placements that require minimal public disclosures. A-CAP also uses a Bermuda-based reinsurer owned by Miami-based private investment company 777 Holdings; A-CAP has also made direct loans to 777. Then, its own reinsurer Haymarket has reinsured some insurance business from its own Sentinel, Atlantic Coast. There is a lawsuit against A.M. Best on potential rating downgrades – A.M. Best said in a court filing that A-CAP is using old A.M. Best ratings in misleading ways and those don’t really apply now, but its rating actions are on hold due to the pending lawsuit. A-CAP used aggressive marketing and sales incentives to issue $1.7 billion in annuities in 2023. The risk is that these illiquid, poorly documented underlying investments in related/linked entities may unravel if there are sudden large withdrawals. It’s not a good idea to rely on unfunded state insurance guarantees because the workouts of failed insurers are messy and take a long time (very unlike the fast workouts of banks under the FDIC insurance).
Pg 18: The $13.61 million ESTATE TAX EXEMPTION (basically, $27.22 million for couples), unless extended, will be cut in half in 2025. The top estate tax rate is 40%. There are several ways to lock-in these exemptions – irrevocable spousal lifetime access trusts (SLATs); preparing documents ahead and wait to see if the exemption will be extended, and if not, quickly implement the plans; couples using the maximum possible exemption for one spouse now, and let the other spouse deal with the issue later.
Pg 19, TECH TRADER. Apple/AAPL needs a miracle – it is now #3 in market-cap behind #2 NVDA. AI has affected these 2 companies quite differently. So, look for the keynote address by AAPL CEO Tim COOK on Monday, 1:00 PM Eastern. AAPL has been taking small incremental steps in AI, but its big AI vision remains to be seen (assuming that it has one). It may partner with OpenAI/MSFT on ChatGPT (GOOGL Gemini may be a natural choice, but the DOJ is already looking at AAPL and GOOGL deal on Search). AAPL Siri is no competition for ChatGPT, Gemini, etc. It may also go with a smaller, phone-based chatbot, rather than cloud-based chatbots. AAPL stock has rallied on expectation(s) of something big from WWDC, but there may be disappointment.
Pg 20, ECONOMY. The LABOR market remains strong. More jobs, wage gains and higher consumer spending will keep INFLATION sticky. The FED can just hold rates until its goal of 2% average inflation is reached eventually. The FOMC will provide some guidance on Wednesday.
Pg 21, FUNDS. TACTICAL ALLOCATION funds have been disappointing, but there are some winners. Featured is MCTOX (ER 1.92%) / MCTDX (ER 1.92%) that uses long-short strategies with ETFs, CEFs, stocks; it’s nondiversified. The ER is net of fee waivers but is still high because it includes expenses from borrowing and the ERs from underlying ETFs and CEFs. Day-trading (mentioned in Prospectus) and short-term trading cause crazy high turnovers. It avoided the hits in 2022; it’s Sharpe Ratio is good. (Inception date is 6/24/21, so it’s just showing up on some 3-yr screens) (TF at Fidelity, NTF at Schwab) Other TAA funds mentioned are LCORX, CTFAX, ETFAX, MDCEX, AHTPX, ETF CEFS. (By @lewisbraham at MFO)
Pg 50, INCOME. Several SMALL-CAPS pay good dividends and there is potential for some dividend-growth. 12 of the SP SC 600 stocks are among dividend Aristocrats. SCs are adversely affected by higher rates. They also have M&A potential. Mentioned are ABM, AWR, AVA, BMI, BRC, CWT, CPK, CBU, FELE, FUL, SJW, SCL; and ETFs DES, DGRS.
Pg 22, INTERVIEW/Q&A. Evan GREENBERG, CEO of Chubb/CB (global P&C insurer). Warren Buffett/BRK secretly accumulated 6% stake in CB (this is permitted by the SEC for influential investors). Father Maurice “Hank” GREEBERG (99) ran AIG, 1975-2004, and Ace Ltd 2004-2006 that was merged into CB. It doesn’t compromise underwriting for market share; it lets insurance novices do that. Higher rates have benefited insurers generally, and also their bond portfolios – CB has $140 billion in short-duration bonds. Insurers cover growing risks from climate, environment, natural disasters, litigations, etc. They rely on their own capital to some extent but transfer excess risks to reinsurers. Several wealthy customers and companies with strong financials can share some risks with their insurers – this is common in the high-end market that CB serves. Insurance markets in some states are very difficult and unprofitable, and several states are using last-resort insurance programs because many insurance companies have stopped writing new insurance. But make no mistakes about it – taxpayers will have to pay when there are underwriting losses in these state programs. So, it’s a social decision – allow higher rates now or subsidize from state funds later. He thinks that the US and China can coexist in trade even when there are cultural and political differences. Unfortunately, recent Chinese policies have been unfriendly for domestic and foreign businesses. In China, CB serves Chinese population that doesn’t have social safety nets and is underinsured. It also has a strong presence elsewhere in Asia.
Pg 51, RETIREMENT. 29% take SOCIAL SECURITY early at 62%, only 10% wait until 70. Despite all the analyses and spreadsheets, simple explanations are that (i) Many need them early, (ii) Some who don’t need them still like spare cash now for discretionary expenses while they are healthy (and (iii) Except for some survivor benefits, Social Security payments stop once one dies, so higher benefits later may not materialize.)
The supplement GUIDE TO WEALTH has Cover Story (see Part 1) and several features on financial careers by former college and professional sports players; sports collectibles; flood of money affecting young athletes. These are followed by state-by-state Top Advisor Directory, Top RIA Firms, and Top Advisory Teams.
NOTE. It’s very irritating that Barron’s has stopped mentioning TICKERS for most companies mentioned. I now have to look them up. Sometimes this takes time as there are similar names, especially for banks.
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).