Saturday, January 14, 2017

Barrons weekend update

Barrons weekend update: Part 1 of annual roundtable 
Cover story: The first 2017 Barron's Roundtable features comments from Scott Black, Jeffrey Gundlach, Oscar Schafer, Abby Joseph Cohen, William Priest, Meryl Witmer, Mario Gabelli, Brian Rogers, and Felix Zulauf; The panelists say that rising bond yields, rich valuations, and global turmoil could limit the market's gains, while the "regime change in Washington will push tax cutters and regulatory reformers back to power." 

1) Barron's 2016 stock picks beat the market, with top pick X delivering a 120% return, and combined bullish picks returning 12.8%; 
2) Despite the growing popularity of National Front candidate Marine Le Pen, the most likely winner of France's presidential election is Francois Fillon, whose pro-business stance would benefit Renault, BNP Paribas, TOT and other French companies; 
3) Peabody Energy investors are upset because the company's bankruptcy reorganization plan would wipe out shareholders and give the company to management and hedge funds that own its debt.

Tech Trader: Earnings results may be fine for some Internet giants, but their shares aren't likely to move much this year amid cooling investor sentiment and regime change in Washington. 

Trader: The so-called Trump trade has five stages, says DB strategist Alan Ruskin, and the market has only just moved past the first one; Under the Trump administration, the key to success for pharmaceutical investors will be finding companies with more innovation and less exposure to pricing pressures; Thomas Lee of Fundstrat Global Advisors recommends oil investors take advantage of an industry rebound with RIG, ATW, RDC, DO, HP, NBR, PTEN, and UNT. 

Profile: George Cipolloni and Mark Saylor, co-managers of the Berwyn Income fund, continuously screen a wide range of assets to find price anomalies (top 10 holdings: Nintendo, TSRA, PBI, PHG, SNI, FLIR, GSK, Carlsberg, GME, GLW). Penta: Joseph Amato, chief information officer at Neuberger Berman, says the economy is still catching up to the Fed's interest rate hike, a "major shift in monetary policy that has yet to solidify." 

Small Cap: Positive on REV: Compared to rivals such as COTY, EL, and L'Oreal, Revlon shares look undervalued, and the company's recession-resistant business generates stable cash flows. 

Follow-Up: Positive on GS: Though investors may be tempted to take their profits on Goldman shares, which are up 72% since last summer, the firm stands to benefit from a rebounding economy, and the stock could get another 15% boost. 

European Trader: Positive on UL: Consumer-products major has made smart, accretive, growth-boosting acquisitions, and is making more products in countries where they are sold, reducing transportation costs. Asian Trader: For investors in Chinese stocks, tech has long been a major draw, but infrastructure spending in China is likely to boost steel and cement companies such as Baosteel and Anhui Conch Cement. 

Emerging Markets: "Mexico once advertised itself as 'The Amigo Country,' but for investors in 2017 it isn't looking like a friendly place," and the peso has yet to hit bottom. 

Commodities: For most commodity watchers, the run-up in iron ore prices was the result of China's credit-fueled steel demand and speculative activity, and they predict a drop in prices when new supply hits the market. 

Streetwise: With U.S.-China relations likely to hit a rocky patch when Donald Trump moves into the White House, a "honeymoon of sorts is developing between U.S. and Russia," says Joseph Quinlan of U.S. Trust, bringing "asymmetric risks" to U.S. companies.