Cover story: The FAANG stocks—FB, AAPL, AMZN, NFLX, and GOOGL—have lost $1.1T since their peaks, part of which may have been the result of herd behavior; The selloff creates an opportunity for investors to reassess them, because the next opportunity for the FAANGs could come from picking them apart and judging each on its own merits.
Tech Trader: A new kind of lending has emerged in fintech: Affirm, launched by PYPL co-founder Max Levchin and others, allows users to pay online for goods with the repayment schedule of an installment loan, based on a new process for gauging credit risk.
Trader: “Investors are fearful that 2019 earnings estimates won’t pan out because of potential global economic weakness, but some reduction in growth already seems discounted in the market”; Bankers are concerned that corporate leverage could trigger the next recession, and Fed chairman Jerome Powell has called out non-financial corporate debt as something to watch; Cautious on TGT: Shares are down after the retailer fell short of same-store sales and earnings estimates, but it’s unlikely the problem is as bad as investors think, and the shares are now a bargain.
Interview: Jamie Zimmerman of Lifespeed Mananagemet, which specializes in event-driven investing, seeks to profit from asset mispricings from mergers, spinoffs, and bankruptcy filings.
Profile: Jamie Cuellar, co-manager of the Buffalo Small Cap fund, looks for companies that benefit from long-term trends, such as cost-containment in healthcare and software-as-a-service (top 10 holdings: TWLO, CXW, MTZ, MIME, MDSO, HQY, HMSY, CONE, EGHT, RGEN).
Features: 1) Cautious on FB: Barron’s likes the stock despite recent controversies, with two caveats: there are concerns about its changing user base and how that will affect selling ads, and it’s possible that recent markdowns could prove to be a lasting reset, not a dip; 2) Positive on WFC, USB, GS, PNC, BK, JPM, BAC: Berkshire Hathaway owns shares in seven of the country’s top 10 banks, a sign the sector offers value because they are less cyclical than other stocks and have more resilient earnings; 3) Early data from CFRA indicated that while it’s still early in the shopping season, hot consumer items—including electronic goods and apparel—are selling fast over the Thanksgiving weekend; 4) Positive on Curaleaf Holdings: As prohibitions against marijuana are relaxed across the U.S. and companies race to obtain licenses and locations, Russia-based Curaleaf is the best funded, though Canadian and U.S. counterparts are catching up; 5) Cautious on IGCC: Company that combines cannabis and blockchain isn’t living up to expectations, and negative details are emerging that are raising questions about its viability.
European Trader: Positive on Advanced Metallurgical Group: Investors who recently soured on lithium sent shares down, and they look cheap, especially given the company’s expanding profit margins.
Emerging Markets: Russia has a host of problems, but an oil-price correction isn’t among them—that’s the message the Kremlin is sending in response to Saudi Arabia’s latest call for exporters to unite on a production cut.
Commodities: Emerging markets such as China and Saudi Arabia are expected to boost demand for uranium, creating significant growth prospects for the sector and benefiting companies such as Kazatomprom.
Streetwise: Investors who opened cryptocurrency trading accounts during the past year are underwater, and most financial institutions are keeping quiet about their Bitcoin ambitions.