Barrons weekend summary: cover story on gold; also discusses Bitcoin and cannabis stocks
Cover story: Gold, “long seen as the investment choice of the cranky and fearful” and out-of-favor because it doesn’t yield anything, now deserves a place in investment portfolios; Compared with stocks and other financial assets, gold looks inexpensive, and provides a hedge against rising inflation.
1) Bitcoin could be a potential threat to gold bulls—some investors believe that as it becomes more mainstream, the cryptocurrency could replace gold in some portfolios, though others say gold is less volatile and is a well-understood commodity;
2) Positive on AMAT, BWA, CAT, KEY, PH: Barron’s screened for promising companies in the capital goods, financial, auto, and semiconductor sectors, and found five stocks with below-average valuations and healthy growth prospects;
3) Cautious on BX, TRI: Much of the $17B buyout of Thomson Reuters’ financial data business by a Blackstone-led consortium will be financed by debt, which makes it reminiscent of 2007—though it has several distinctly modern features;
4) Interval funds, which provide access to illiquid assets and which have long been on the market, are gaining new ground among some fund managers.
Tech Trader: Positive on BSX, ISRG: Companies are hot performers in the medical-device sector, which has been one of the year’s strongest gainers—and though valuations are high, it’s likely many of the sector’s shares will stay aloft.
Trader: Rising yields could signal a lasting shift away from tech stocks, says Thomas Lee of Fundstrat Global Advisors, and turn some of this year’s winners into losers; Investors need to approach bank shares with caution—the spaces remains healthy, says Ken Zerbe of MS, but things are getting weaker on the loan-growth side; Cautious on BA, LMT: “The defense sector has benefited from forces that are now starting to reverse, at a time when valuations are historically high,” and investors may see less-robust returns.
Profile: Howard Greene and Jeff Given, co-managers of the John Hancock Bond fund, invest in multiple sectors of the bond market and aren’t afraid to take credit risk, most recently in securities backed by prime auto loans.
Interview: Bill McGlashan, founder and managing partner of TPG Growth, talks about investing for a cleaner, healthier, and more equitable world through his Rise fund, which raised $2.1B last year. Follow-Up: Positive on Berkshire Hathaway: The company may no be a “screaming bargain,” says David Rolfe of Wedgewood Partners, but the shares are still undervalued.
European Trader: Turkey’s stock and currency have taken a hit, but the recent stabilization of the Turkish lira may be paving the way for a bounceback in the shares; Investors seeking to profit from the potential upturn should consider TUR.
Emerging Markets: Emerging markets are going through a “slow motion crisis,” says Harvard international finance professor Carmen Reinhart—and it’s not just hot spots such as Argentina, Brazil, and Turkey.
Commodities: “There are still several weeks before U.S. sanctions on Iranian oil actually kick in, but expectations of tight crude inventories already have contributed to much of this year’s gains in global prices.”
Streetwise: “It’s hard to understand why TLRY is valued above large, more established rivals like Aurora Cannabis and CGC” in the marijuana sector, whose “stocks are the new bitcoin,” says Barron’s columnist Bill Alpert.