Cover story: Proxy voting professionals and practitioners say the system needs to change, with the PG-Trian proxy fight the “latest failure in a system that is unresponsive to institutional and retail investors, and increasingly at risk of producing an erroneous result in a close vote.”
Features: 1) Positive on LMT, MPC, INTC, KORS: With the effects of Donald Trump’s trade wars uncertain, Barron’s found four companies whose earnings outlooks have climbed in recent months by more than their share price; 2) Cautious on TOL, DHI, LEN, PHM: Many investors see homebuilders as “early cycle” stocks that should be avoided toward the end of a long economic recovery, but bulls says the cycle will continue because the U.S. has underbuilt housing over the past decade; 3) Blockchain, the technology behind bitcoin, could be a solution to problems related to the use of middlemen in the proxy process, from solicitors to banks to tabulators, making tracking votes difficult; 4) Story looks at three proxy votes that went bad, including one that led TROW to erroneously vote for Michael Dell’s bid to take his company private, for which the firm had to compensate clients.
Tech Trader: Cloud computing is the greatest revolution in technology since the advent of the World Wide Web, but a backlash—called edge computing, led by old guard companies such as Dell, IBM, HPQ, HPE, NTAP, and CSCO, all imperiled by the cloud—is under way.
Trader: China’s ability to push back on U.S. tariffs may be limited, but the trade war could serve as a further impetus for Beijing to internationalize its currency, impacting the dollar’s role as the world’s reserve currency.
Barron’s Mutual Fund Quarterly: 1) A look at funds that have outperformed the market in a tough climate for bonds; money-market and short-term funds pose the least risk, while floating-rate, unconstrained, and high-yield muni bonds may be more volatile (+ VMFXX, THOPX, SEMRX, BSCK, EAFAX, FLOT, PUBAX, OSTRX, IOBAX, NHMAX); 2) With the winding down of a 35-year bull market in bonds and the potential for rising inflation, bond investors need to be stingy about management fees; 3) In an interview, Dan Wiener of Vanguard and Jim Lowell of Fidelity, who are a team at Adviser Investments, talk about their favorite fund managers, and say that healthcare is the best long-term opportunity right now; 4) Astonishingly high yields, often into the mid-teens, make collateralized loan obligations—which are typically institutional investments—worth another look.
Follow-Up: Positive on Embraer: Business jet prices are firming up, which could be good news for the company, but the best way to invest in it might be through BA, which now has a stake in Embraer’s narrow-body C-series.
European Trader: Cautious on Glencore: A selloff following a Justice Department subpoena could make it a good time to buy on the dip, but there’s a good case to made for holding off, especially if China demand weakens or other legal problems emerge.
Emerging Markets: “A number of Asia-based strategists believe Southeast Asian stocks are within 5-10% of their bottom and should be on the shopping list of long-term investors.”
Commodities: “Platinum, with its price at the lowest level in nearly a decade, might soon attract the interest of bargain hunters.”
Streetwise: Dell Technologies’ $21.7B cash and stock bid to buy out holders of DVMT, a Dell stock that tracks VMW, is likely to gain shareholder approval, though the tracking stock’s holders deserve a better deal.