Saturday, January 26, 2019

Barrons weekend summary

Barrons weekend summary: positive feature on DELL 
Cover story: A look at 15 companies whose facilities have the greatest exposure to climate change and extreme weather, according to market intelligence firm Four Twenty Seven; scores are based on operations risk, market risk, and supply chain risk, based on databases of corporate facilities, as well as climate and weather data (cautious on NCLH, WDC, NEE, MU, EMN, ED, STX, MRK, AMAT, PEG, D, RCL, INCY, TROW, BMY). 

Features: 1) Companies with low debt are a good bet for investors facing an environment of slowing economic growth and elevated macro risks; Barron’s screened for companies with attractive valuations and strong returns on assets, and which have more cash than debt (Positive on GILD, KLAC, TER, GNTX); 2) Positive on DELL: Company is one of the most intriguing value plays in the market today because of its 81% stake in VMW, a fast-growing software company, as well as interests in PVTL and SCWX, worth a combined $53B, or about $19B more than Dell’s current market value of $34B; 3) In a year when most tradable assets declined in value, Barron’s had a mixed record of pointing investors toward the winners and warning them away from the losers; bullish picks trailed benchmarks by about a percentage point, but bearish calls were often spot-on. 

Tech Trader: Venture capitalist Marc Andreeson’s claim that software would disrupt large portions of the economy and nearly every industry because of the transformative effects of the cloud’s cheaper computing power has proven correct—and in a tumultuous market, enterprise software firms such as CRM remain a powerful secular investment story. 

Trader: The market has already made back a large portion of its December losses, and while the easy money has been made, valuations suggest more upside, says Citigroup chief U.S. equity strategist Tobias Levkovich. 

Interview: Shawn Kravetz of Esplanade Capital Partners manages $30M and likes what he calls OUCH stocks: out-of-fashion, undiscovered or underfollowed, cheap, and hated, which has recently included gaming stocks (picks: PENN, GDEN, CNTY, AZRE). 

Profile: Dan Davidowitz, lead manager of the Polen Growth fund, one of Barron’s top-ranked sustainable mutual funds, doesn’t focus specifically on ESG investing, but looks for companies with strong financial performance that have the resources to be good stewards and employers (top 10 holdings: MSFT, GOOG, V, FB, ORLY, ADP, ADBE, NKE, SBUX, ZTS). 

Emerging Markets: Cautious on Tencent Holdings: Investors seem unconvinced that the maturing company can maintain the youthful growth spurt that its stock valuation reflects, and U.S. giants may be a better buy after their recent selloff. Economy and Policy: The Chinese economy has done an exemplary job of boosting its labor and capital inputs since Deng Xiaoping began the process of “reform and opening up” in 1978, but the long boom is over: Persistent weaknesses in productivity growth and a looming demographic catastrophe will hobble the country for decades to come.

Commodities: “Palladium started the year on a positive note, with futures prices already up by more than 10% after hefty gains in the last three years. Better yet, analysts are upbeat about the long-term prospects for the metal.”

Streetwise: CEOs in banking, manufacturing, and retail say they have made expensive operational changes to prepare for worst-case trade war and Brexit scenarios—moving production from China to Vietnam and India, or relocating London-based trading and banking operations, which are sunk costs that won’t be reversed, even if 25% tariffs or a hard Brexit don’t come to pass.