Saturday, June 9, 2018

Barrons weekend summary

Barrons weekend summary: positive features on LUV; cautious on Lowes 
Cover story: High-power batteries, which are set to disrupt the car industry in the coming decades, are quickly multiplying across the U.S. power grid, which will allow consumers to save on energy, towns to cut pollution and add jobs, and utilities to enjoy lucrative growth. 

Feature: 1) Positive on LUV: A recent midair accident, high fuel prices, and rivals’ expansion have pushed down the carrier’s shares, but with its strong business model and share buyback plans, the dip poses an opportunity for investors; 2) Hedge funds including BlueMountain Capital, Citadel, Apollo Global Management, Elliott Management, and Anchorage Capital Partners have been working together for months to fix credit-default-swap contracts; 3) Cautious on L: Conglomerate’s disclosure it may buy out the limited partners of BWP, which it controls, has prompted angry reactions from some minority investors who fear Loews will exercise its call right at an unfair price. 

Tech Trader: “These days the difference between expensive and inexpensive tech stocks is misleading. Many companies are having a hard time holding onto any valuation premium, whether or not their shares are relatively cheap or relatively pricey.” 

Trader: Michael Hartnett, chief investment strategist at BAC/Merrill Lynch, says it’s possible markets will see the return of “1998 risk,” in which the problems in emerging markets grow and eventually force investors in the U.S. to take defensive action; Positive on AABA: The company “remains a good proxy for investors seeking exposure to BABA” because of Altaba’s 15% stake in the e-commerce giant; In a new MIT working paper, researchers say that “managers seem tempted to overstate earnings as their companies gain attention and the rewards for lying increase.” 

Interview: Jenny Van Leeuwen Harrington, portfolio manager and CEO of Gilman Hill Asset Management, says a company’s dividend should be sacrosanct, even in tough economic times (picks: SIX, LB, QCOM). 

Profile: Magnus Larsson, lead manager of the AMG TimesSquare International Small Cap fund, says international small-mid-cap stocks are one of the few market sectors where active management can consistency add value. The Top 100 Women Financial Advisors: Barron’s annual list is topped by Karen McDonald of Morgan Stanley Wealth Management, Kimberlee Orth of Ameriprise Financial, and Valerie Newell of RiverPoint Capital Management. 

Follow-Up: Cautious on SBUX: With chairman Howard Schultz stepping down, “the time might be right for an activist investor to push for change—and presumably push Starbucks shares higher,” a move that would have to focus on capital allocation. 

European Trader: Uncertainty related to Trump administration auto tariffs has dented shares of German car makers, but they should quickly regain lost ground. 

Emerging Markets: The real problem for the Chinese stock market isn’t U.S. tariffs, but the nearly 170% of GDP in debt piled up by Chinese corporations, five times the proportion for U.S. companies. 

Commodities: “Copper has shown promise in recent weeks, and the long-term outlook is bright as global demand gradually strengthens, but realizing that potential may take time.” 

Streetwise: A potential presidential run by departing SBUX chairman Howard Schultz would have to reckon with a crowded field, and some of his ideas don’t match up with core Democratic Party ideas.-