Sunday, December 17, 2017

Barrons weekend summary

Barrons weekend summary: Cover story positive on MUNIS; positive on ALK; cautious on DIS/FOXA deal and expect more industry consolidation 
Cover story: The tax changes proposed by Congressional Republicans have targeted several categories of bonds, which will lose their tax exemptions so the government can increase its revenue; Despite that, “the relatively high after-tax yields of munis still make them attractive for investors.” 

Features: 1) The high valuation of NFLX—shareholders pay $47 for every $1 of cash flow it generates, a multiple no other media company has—has rivals scrambling to catch up, and more consolidation should come after the DIS-FOXA tie-up; 2) “Even after this year’s broad rally in stocks and bonds, plenty of income-oriented investments remain enticing” including MLPs, telecoms, REITs, and high-dividend stocks in the U.S. and Europe; 3) Positive on ALK: Investors have a number of concerns, including the carrier’s steps to absorb Virgin America, fare pricing, and cancellations, but its balance sheet is healthy and growth potential is robust, and shares should rise in 2018; 4) Cautious on DIS, FOXA: Disney’s proposed acquisition of assets from 21st Century Fox “is a murky web of deals within deals” that one analyst said is the “most complex transaction she’s ever had to analyze.” 

Tech Trader: Cautious on AAPL: The tech giant continues to release phones with dazzling new features, but software bugs increasingly require updates to fix; There is no sign of a user exodus, but a loss of faith in Apple’s software could curb growth. 

Trader: The end of crisis-level monetary stimulus will eventually affect what investors are willing to pay for riskier assets, says JPM strategist Marko Kolanovic; Utilities are sitting out the latest rally, another reason investors should be cautious when looking for opportunities in this dividend-heavy sector; “At some point, earnings growth will tail off, a recession will hit, and this bull market will end. That doesn’t make it a bubble.” 

Profile: Sammy Semnegar, manager of the Fidelity International Capital Appreciation fund, looks for international companies benefiting from global megatrends; the fund has returned an average of 11.3% annually during the past five years (top 10 holdings: Tencent, BABA, TSM, UL, British American Tobacco, Naspers, SAP, AIA Group, LVMH Moet Hennessy Louis Vuitton, DEO). 

Interview: Mike Kirby, chairman and director of research at Green Street Advisors, the leading independent research firm in the REIT sector, talks about valuations, New York commercial real estate, and WeWork. 

European Trader: Cautious on Steinhoff International Holdings: Though shares of the global retail giant have been marked down by about 80%, bargain hunters should be wary of diving in until management takes concrete steps to fix problems. 

Asian Trader: Investors in China need to monitor the pace of monetary tightening, real estate values, and A-shares in the MSCI emerging markets index if they hope to get a solid outlook for the country in 2018. 

Emerging Markets: Greece has seen three straight quarters of economic growth, unemployment is down, and the budget has a surplus, improvements that have benefited bondholders and bode well for investors. 

Commodities: “The Bitcoin craze may have helped dull some of gold’s shine in recent weeks, but the cryptocurrency is no substitute for the precious metal.” 

Streetwise: XOM’s move to disclose more about what tightening climate-change regulations might do to the long-term value of its assets will prompt rivals to follow suit, creating the potential for major change in the industry.