Cover story: The second installment of Barron’s Roundtable offers picks from panelists Henry Ellenbogen of New Horizons Fund (EFX, MTN, BFAM, SERV, SHOP, GRUB); Mario Gabelli of Gamco Investors (MSG, Liberty Braves Group, MGM, Davide Campari-Milano, ZBH, CNHI, GCP, PCAR, TXT, ENR); Jeffrey Gundlach of DoubleLine Capital (XLE, NTG, BKLN, EWZ, DXJ); Abby Joseph Cohen of GS (OXY, Samsung Electronics, ABBV, China Railway Signal & Communication, MDLZ); William Priest of Epoch Investment Partners (SBUX, OLED, AMAT, MLM, MET); Scott Black of Delphi Management (LRCX, HCLP, GTN, ARCC, HOFT); and Meryl Witmer of Eagle Capital Partners (KMX, OEC, Dart Group, Howden Joinery Group).
Features: 1) Small caps are in a bull market, but there are more risks than many investors realize: many companies are carrying large debt loads, and shares are expensive by historical standards; 2) At CES this year, tech companies heavily pitched their IoT strategies, but “beneath the veneer of convenience, there are considerable obstacles that could sidetrack or delay tech’s utopian vision”; 3) Keith Sanders, the director of operations at a Georgia book distributor, is the winner of the 2017 Barron’s forecasting challenge, topping more than 3,000 other entrants.
Tech Trader: Technology has a harder time than other industries putting vast amounts of cash to work, and while the tax overhaul may lead to some investment in U.S. manufacturing, tech outfits will most likely boost dividends, buybacks, and M&A.
Trader: The wider the gap grows between the 10-year Treasury yield and the S&P 500’s dividend yield, the more enticing bonds will become for yield-seeking investors; As companies bring money back home under the new tax law, some may try to boost growth through acquisitions; Betting on BA, which is trading at 42.8% above its 200-day moving average, may seem risky, but history shows the stock can remain extended for a long time when it’s in that region.
Profile: Mark Baribeau, co-manager of the Prudential Jennison Global Opportunities fund, seeks to build a “unique collection of business models that have a lot of firepower” (top 10 holdings: Tencent Holdings, BABA, Kering, AMZN, MELI, FB, NFLX, UNH, MA, CHTR).
Follow-Up: Positive on WMT: The retailer’s acquisition of Jet.com and the talent infusion it brought has put the company back on entrepreneurial footing, as with its move to shutter some Sam’s Club stores and turn others into fulfillment centers for its online business.
European Trader: Cautious on H&M: Shares of the Swedish retailer are down since mid-December, and “there is a chance that the pessimists are right, and a big rally isn’t in the cards at this point.”
Asian Trader: Positive on AIA Group: The largest pan-Asian life insurer remains one of the most attractive insurance stocks around, partly because it’s in the middle of the world’s fastest-growing life-insurance market.
Emerging Markets: The time may have arrived for emerging markets sectors that have lagged—such as banks, utilities, and commodities producers—to gain ground, but betting on them isn’t straightforward.
Commodities Corner: Gold prices could hit record highs this year, driven in part by declines in the U.S. dollar and Treasury bonds, excessive optimism in the stock market, and surging inflation.
Streetwise: Columnist Vito Racanelli critiques Larry Fink of BLK’s call for companies to make a positive contribution to society, saying such an approach isn’t a sustainable way spark social change.