Saturday, January 7, 2017

Barrons weekend update

Barrons weekend update: positive on KKR, EXPE 
Cover story: Barron's looks at funds that had a rough time in 2015, fared better in 2016, and are likely to continue to outperform as market conditions grow more favorable for active managers (Positive on PNEAX, DFLVX, DODGX, GOODX, SSHFX, PRFDX, VUVLX); Returns for index investing could underwhelm in the near future, while value managers should benefit. 

1) Positive on KKR: Investors need to reconsider their take on the private equity firm, which may be hard to understand but which could benefit greatly from Donald Trump's proposed tax reductions; Positive on EXPE: Shares haven't risen too much during the past year and a half, but they have a 25% upside as the hotel sector improves and company's acquisitions pay off. 

Tech Trader: As smartphone sales slow, the tech industry increasingly sees automobiles as the next big opportunity; Developing smarter cars is likely to give tech firms a boost, especially incumbent auto-chip suppliers such as NXPI and NVDA.

 Trader: JPM head of U.S. equity strategy Dubravko Lakos-Bujas says the rally in the S&P 500 has boosted its valuation to 17.1 times earnings, a sign investors are betting on better earnings in the months ahead; Cautious on M, KSS, JWN, ASNA, UA: Americans haven't slowed down their shopping, but they've moving from department stores to online retailers such as AMZN; Under the Trump administration, Japanese automakers could face risks, says Alain Bokobza of Societe Generale, while Jeffrey Miller of Eight Bridges Capital Management says it will be hard to figure out how to play the winners. 

Small Caps: The column looks back on its hits (ESL, CFX, SBCF, HCHC, CUB) and misses (HMHC, RELY, JLL, PDCO, EPC) from 2016. 

Mutual Fund Quarterly: 
1) Morningstar analyst John Rekenthaler discusses how to invest in the Trump era and provides advice about the mutual fund industry, Dodd-Frank, fees, and the fiduciary rule; 
2) Chris Davis of Davis Advisors hope the launch of three new actively managed exchange traded funds will prove such funds can succeed despite the daily transparency required by regulators; 
3) Eleven mutual funds have survived since the crash of 1929, four of which are lesser-known than their bigger peers but continue to offer respectable performance, high payouts, and big discounts (Positive on ADX, CET, GAM, TY); 
4) JNS, the poster child for active management, has been getting into the ETF sector, an inexpensive move but one which probably won't boost the firm's bottom line by much; 
5) "U.S. mutual funds enjoyed a strong fourth quarter, helped by an increasingly bullish outlook for the domestic economy-causing many small-company, value, and financial portfolios to shine. 

Follow-Up: Cautious on BKS: Following a weak holiday season, company faces a challenge stabilizing its book business amid a tough retail sector and an ongoing threat from AMZN-but a low valuation and 5.5% yield are attractive; Cautious on UPS: "The shipping company's shares look to have peaked for now, given growth strains and likely protectionist measures." 

European Trader: Positive on CS: The Swiss bank "has struggled to restructure its business and address costly legacy issues in recent years," but investors seem to believe its on the right path, and shares could gain as much as 13%. 

Asian Trader: Cautious on AirAsia: Southeast Asian budget carrier performed well in 2016, but a decline in Malaysia's currency coupled with the absence of growth catalysts could send shares down by 20%. 

Emerging Markets: Experienced stockpickers are the best alternative for fund investors seeking value and portfolio diversification in markets such as Pakistan, Nigeria, and Kuwait. 

Commodities: The natural-gas rally probably isn't over, because colder winter temperatures are still possible, making the recent price drop temporary; investors may want to consider ETFs to play the sector. 

Streetwise: Vanguard chief executive Bill McNabb says investors need to prepare for uncertainty, save more, safeguard assets, and stay well-informed.