From Barron’s, January 29, 2024 (Part 2)

[yogibearbull]

Pg 9. FOMC Statement and Powell’s presser on WEDNESDAY.

PREVIEW & REVIEW (consolidated). Chipotle Mexican Grill/CMG is getting ready for “burrito season (March-May)” by appealing to older Gen Z (in 20s), 73% of its employees. It’s offering student loan assistance, debit cards, personal finance education. In general, there are now more Gen Z than Baby Boomers in the workplace, and Gen Z will account for 33% of the global workforce by 2025.

DATA THIS WEEK. Consumer confidence, JOLTS report on TUESDAY; construction spending on THURSDAY; durable goods orders, factory orders, UM consumer sentiment, jobs report (+165,000 to +175,000), unemployment rate (3.6% to 3.8%).

www.barrons.com/magazine?mod=BOL_TOPNAV

Data This Week Link,

www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate



BULLISH. Chesapeake Energy (CHK; yield 3.0% variable; post-bankruptcy 2020- ; fwd P/E 9; pending merger with Southwestern Energy/SWN (fwd P/E 4.9); post-merger combo will be the largest US natural gas company by market-cap, and may join the SP500; bet is that natural gas will remain viable as transitional fossil fuel for a long time; most of the US electricity generation now is with natural gas; while it is expensive outside of the US, India and China have big plans; LNG requires special facilities for export and transport; BIDEN administration has delayed approvals of NEW LNG facilities, but many others under development/construction now can continue; GIROUX/PRWCX/TCAF has positive comments; pg 10).



BEARISH.



Pg 12, FUNDS. Best HEDGE-FUNDS now are those with multi-strategies (Citadel, Millenium, D.E. Shaw, AQR, etc) and multi-managers with overall risk disciplines, not those that swing to the fences. But even the best hedge-funds badly lagged the SP500 in 2023, and industry outflows may follow. A recent golden period for hedge-funds was 2018-22. The newer hedge-funds have different fee structures – pass-through expense approach (so, still very high ERs) rather than the old 1-2% of AUM + 20% of profits over the watermarks.



Pg 14, “2024 Barron’s ROUNDTABLE”. It’s hard to summarize with attributions, so only the topics discussed are highlighted. A full day of meeting was held on January 8 in the NYC & 11 Panelists’ (alphabetically below). This final Part 3 has recommendations from COHEN, ELLENBOGEN, GABELLI, JAIN; Part 1 &2 recommendations are retained.

Todd AHLSTEN, Parnassus CIO & PRBLX: DE (precision-ag, profitable finance arm), ICE (exchanges, financial technologies & servicing), INTC (value-tech with turnaround potential), MAR (strong EBITDA, ROC; 31 brands), ORCL (interesting AI & cloud computing play), TMO (life sciences tools, growth via M&A)

Scott BLACK, Delphi Management: EG (reinsurance & insurance), FANG (independent oil/gas producer), GPN (fintech – payment services), OSK (farm & construction machinery, fire & emergency equipment)

Abby COHEN, Columbia U: CVX, EL, Lynas Rare Earths (Australia),Japan Hotel REIT (Japan), Nippon Prologis REIT (Japan; logistics), PFE

Sonal DESAI, Franklin Templeton (only recommends bond & hybrid funds from her firm & others): EADOX, FDAAX, FHYVX, FRIAX, IGSB, IUSB, LMNVX, PAMYX

Henry ELLENBOGEN, Durable Capital Partners: BFAM (employee childcare & backup care), BIRK (2023 German footwear IPO), CHE (healthcare, home services), HUB (CRM – customer relationship management), JBHT (intermodal freight, truck fleet management), TOST (IT services for restaurants)

Mario GABELLI, Gabelli Funds (his unloved 8 are a play on Magnificent 6): BATRK, CNHI, HSIC, MSGS, PARA, SPHR, TGNA, TV

David GIROUX, T Rowe Price CIO & PRWCX (PRCFX, TCAF): BIIB (new CEO, 11/2022- ), CNQ (Canadian oil-sands), FTV (instrumentation & testing), RTX (aerospace & defense), WCN (waste management)

Rajiv JAIN, GQG Partners: Adani Enterprises (India), Adani Ports (India), ARM (09/2023 IPO), Banco BTG (Brazil), BBVA (Argentina), Bank Central Asia (Indonesia), International Holding (UAE), NVDA, PBR (Brazil), TTE (France); no recommendations from China.

William PRIEST, Epoch: EVVTY (Sweden; B2B online casino services), KYCCF (Japan; automation & inspection), META (largest social-media company, but often hated), ON (semi chips for auto & industrial companies), RELX (business analytics)

John ROGERS, Ariel Investments: ATGE (for-profit healthcare education), LESL (housing services – pools & spas), NVST (dental manufacturing), SPHR (novel arena for concerts & sports, display ads; spinoff from MSGE), SRCL (medical waste management, document shredding)

Meryl WITMER, Eagle Capital Partners: GHC (education, student housing, media, manufacturing, healthcare, auto dealerships, other), WTFC (holding company with 15 community-bank subsidiaries in the Midwest (IL, WI))



Pg 25, FUNDS. To avoid the Magnificent 6 and mega-caps in market-cap based funds (SPY, VOO, IVV; XLK; XLE; QQQ, etc), use equal-weight funds RSP, tech RSPT, energy RSPG, Nasdaq 100 QQEW, etc. There are equal-weight versions of most sector ETFs.



EXTRA, FUNDS. 2024 may finally (!) be a stock-picker’s year. This market led by Magnificent 6 has a narrow breadth. The bull may live longer if it broadens a little. The number of analysts per stock peaked in 1989, and there are 40% fewer active mutual funds since 2014. Mentioned are FBGRX (ETF cousin FBCG), OAKMX, POSKX.



Pg 25, INCOME. Muni yields aren’t attractive (MUB 3.1% only) even after accounting for taxes, so some are looking into leveraged CEFs (NEA, etc) or funds of CEFs (OEF ROBAX; not mentioned is ETF XMPT).



Pg 26, TECH TRADER. Coming big tech earnings from GOOGL, MSFT, AMZN, AAPL, META will provide an assessment of the impact of AI. So far, the reports were good for IBM, NOW, STX, but poor for INTC, TXN, LOGI, TSLA.



Pg 27, ECONOMY. FOREIGNERS are getting concerned about the rising US debt ($34 trillion) and frequent DC fights over budgets and deficits. And soon, the Treasury will release plans to issue $2 trillion of US Treasuries. Asians hold $2.9 trillion in US Treasuries with Japan and China in the lead. The Asian and European buyers may hesitate to step in the upcoming Treasury auctions. Geopolitical issues make things complicated – US-China-Taiwan, dollar-diplomacy, regionalization. The US Fed monetary tightening is causing global financial stresses. China also has ambitious plans for yuan trading and is diversifying its reserves (its US Treasury holdings peaked in 2013). While a lot of the US debt is held by friendly countries, a first-seller for whatever reason can create chaos – make your own guess about who? China? HK? Taiwan? India? Singapore? S Korea? (William PESEK is a Tokyo-based business writer; book Japanization, 2014)



EXTRA, Q&A. Rick WATERS, Eurasia Group. CHINA has announced new incremental stimulus for economy but those may not be enough. It’s still suffering from Covid policies and crackdowns on big businesses. It won’t be easy to turnaround negative household and private sector sentiments. On the global scene, China is facing uncertainty, and its response has been more central authority and to tighten internally. It is already taking steps to counter potential Western sanctions in the future (complicating US-China-Taiwan issues). It is balancing growth, security, environment, consumers without a clear focus. It may be bottoming now.



EXTRA, CEO INTERVIEW. Adena FRIEDMAN, Chair & CEO, Nasdaq. Fwd P/E 20. It’s an exchange that is diversifying/growing into fintech – business solutions through acquisitions (Verafin, Adenza, etc). There are also integration risks.



Pg 54, OTHER VOICES. Sarah SEWALL, IQT or In-Q-Tel, a VC-backed nonprofit for national security matters. CHINA has control over several critical chemicals and minerals (rare-earths, gallium, germanium, lithium, cobalt, graphite, etc). Some of the related facilities aren’t environment-friendly, but China has supported their development. China is also known to use their supplies for political purposes, just as the US does for its advanced semis. The US is pushing to develop domestic or alternate supplies (onshoring or friendshoring), but this is beyond the capabilities of the private sector alone. Several startups are engaged in these areas and are benefitting from the US Chips and Science Act. Critics say that heavy government involvement will make it the arbiter for winners and losers.



Pg 55, RETIREMENT. The annual MEDICARE ADVANTAGE open enrollment period (MA OEP) is January 1-March 31. One can switch the MA plan or go back to the original Medicare (separate Parts B and D, and supplemental Medigap that may have exclusions for pre-existing conditions). The MA plans now cover 50%+ of the Medicare participants. Run by private insurers under contracts with Medicare, the MA plans are attractive for a combined coverage for Parts B and D, supplemental coverage and additional benefits (eye, dental, gym, etc) at lower costs. For better access/coverage, use the MA PPO, not the MA HMO; prior authorizations may also be required for some treatments.



NOTE. It’s very irritating that Barron’s has stopped mentioning TICKERS for most companies mentioned. I now have to look them up. Sometimes this takes time as there are similar names, especially for banks.



(EXTRAS from online Friday that didn’t make the weekend paper version)

See Column Topics. It seems some consolidation/rearrangement of Columns is going on.

None

LINK

[uncleharley]

For those of us who are retired or close to it, Pg 55 is very useful.

[chang]

“EXTRA, FUNDS. 2024 may finally (!) be a stock-picker’s year. This market led by Magnificent 6 has a narrow breadth. The bull may live longer if it broadens a little. The number of analysts per stock peaked in 1989, and there are 40% fewer active mutual funds since 2014. Mentioned are FBGRX (ETF cousin FBCG), OAKMX, POSKX.”

This is exactly why I am funding a position in TCAF in taxable.

Edit: VPCCX is almost the same fund as POSKX at a lower ER (new positions available only in Flagship accts). VPMAX/VHCAX might be better than either of them at still lower ER.

---

“Pg 25, INCOME. Muni yields aren’t attractive (MUB 3.1% only) even after accounting for taxes, so some are looking into leveraged CEFs (NEA, etc) or funds of CEFs (OEF ROBAX; not mentioned is ETF XMPT).”

Why borrow money at the peak of the interest rate cycle? The underlying bonds are the same; the CEFs simply borrow money (you pay for it) to buy more. I just don’t understand many people’s approach to leverage, especially if they simultaneously hold cash or cash-like assets.

[Deleted]

Jan 27, 2024 13:22:32 GMT uncleharley said:

For those of us who are retired or close to it, Pg 55 is very useful.

Why, because they missed the last 3 months of non-stop obnoxious commercials for Advantage plans? I think if anything, the retired and those close to it should ask why these plans are so heavily pushed on them.

[uncleharley]

Jan 27, 2024 17:37:37 GMT @django said:

Jan 27, 2024 13:22:32 GMT uncleharley said:

For those of us who are retired or close to it, Pg 55 is very useful.

Why, because they missed the last 3 months of non-stop obnoxious commercials for Advantage plans? I think if anything, the retired and those close to it should ask why these plans are so heavily pushed on them.

So they would know to choose the PPO plan not the HMO. 

[Deleted]

Jan 27, 2024 19:34:49 GMT uncleharley said:

Jan 27, 2024 17:37:37 GMT @django said:

Why, because they missed the last 3 months of non-stop obnoxious commercials for Advantage plans? I think if anything, the retired and those close to it should ask why these plans are so heavily pushed on them.

So they would know to choose the PPO plan not the HMO. 

All of the recent news I've read about an increasing number of physicians refusing Advantage Plan patients and patients feeling trapped in these plans haven't differentiated between PPO and HMO.

Frankly, I'm shocked at what seems like a commercial masquerading as journalism in Barron's. What research have they done to declare that these plans are "attractive"?

[uncleharley]

Jan 28, 2024 1:51:42 GMT @django said:

Jan 27, 2024 19:34:49 GMT uncleharley said:

So they would know to choose the PPO plan not the HMO. 

All of the recent news I've read about an increasing number of physicians refusing Advantage Plan patients and patients feeling trapped in these plans haven't differentiated between PPO and HMO.

Frankly, I'm shocked at what seems like a commercial masquerading as journalism in Barron's. What research have they done to declare that these plans are "attractive"?

Mine works for me.

[anitya]

"BULLISH. Chesapeake Energy (CHK; yield 3.0% variable; post-bankruptcy 2020- ; fwd P/E 9; pending merger with Southwestern Energy/SWN (fwd P/E 4.9); post-merger combo will be the largest US natural gas company by market-cap, and may join the SP500; bet is that natural gas will remain viable as transitional fossil fuel for a long time; most of the US electricity generation now is with natural gas; while it is expensive outside of the US, India and China have big plans; LNG requires special facilities for export and transport; BIDEN administration has delayed approvals of NEW LNG facilities, but many others under development/construction now can continue; GIROUX/PRWCX/TCAF has positive comments; pg 10)."

TCAF is underweight Energy - 2.4% to 4.3% in S&P500.  Do I take it that his positive comments are about CHK?

[yogibearbull]

This was posted in the Medicare thread,
big-bang-investors.proboards.com/post/46785/thread

Our Aetna MAPD (Medicare Advantage with Prescription Drugs) has both HMO and PPO options. MA-HMO has a slightly lower premium but comes with the restrictions of the HMO - mainly, that treatments must be recommended by a primary physician on the HMO network, and some HMO plan can be quite local. We never signed up for HMO - it was also available while I was working.

On the other hand, MA-PPO has more flexibility in that we can see any doctor. There may be different levels of coverage for doctors and hospitals in or out of the network, but this particular Aetna MAPD has the same coverage for in or out of network.

I have seen some reports that some doctors may refuse MAPD, but we haven't seen any difference. We have been on employer group plan, the original Medicare, and now employer/retiree MAPD (it's required if we want to be in the group), and we haven't seen any difference in the coverages. But we are with a large plan in a large metropolitan area, and may be things can be different in rural areas. I also don't see how the doctors and hospitals who deal with insurance companies routinely while people are working suddenly become bad when it comes to MAPD only. How suddenly the government becomes the best provider, and if so, why people in the US don't want a national health plan?

[yogibearbull]

Jan 28, 2024 6:32:23 GMT anitya said:

"BULLISH. Chesapeake Energy (CHK; yield 3.0% variable; post-bankruptcy 2020- ; fwd P/E 9; pending merger with Southwestern Energy/SWN (fwd P/E 4.9); post-merger combo will be the largest US natural gas company by market-cap, and may join the SP500; bet is that natural gas will remain viable as transitional fossil fuel for a long time; most of the US electricity generation now is with natural gas; while it is expensive outside of the US, India and China have big plans; LNG requires special facilities for export and transport; BIDEN administration has delayed approvals of NEW LNG facilities, but many others under development/construction now can continue; GIROUX/PRWCX/TCAF has positive comments; pg 10)."

TCAF is underweight Energy - 2.4% to 4.3% in S&P500.  Do I take it that his positive comments are about CHK?

In LAST week's Barron's Roundtable, Part 2, GIROUX said that he was equal-weight in energy for the first time in 10 years while discussing Canadian oil-sands CNQ. Rajiv JAIN also jumped in and said that GQG likes CNQ. However, natural gas CHK wasn't mentioned.

So, in THIS week's Barron's, under its Stock Pick natural gas CHK (not under Roundtable, Part 3), I was surprised to see GIROUX' comments near the end of the piece. He is noted as among the largest holders of CHK and said that on the merger with SWN, there is 20% upside.

I think that the point is that Giroux hasn't been a big player in energy in the past, but he is now.

I only own TCAF -I don't have access to PRWCX, and I don't see the point of PRCFX yet.

Also note that JAIN prominently mentioned 2 of Adani companies in India. He was among the first US managers to do a deep-dive into Adani group AFTER short-seller Hindenburg Research's report, and said soon after that he was comfortable with them. I suppose he also bought some at the depressed prices then. Anyway, there was lot of media excitement about Adani short-report in the Indian media and the talks of government and court investigations, but nothing came off those. Adani group's international expansion, including Israeli ports, weren't derailed and went on as scheduled. I suppose, value guys shine when there is sudden chaos from whatever source.

[Deleted]

As someone in poor health that signed up for Medicare, Medigap, Plan D at age 65, buying the most comprehensive insurance that I could afford made sense to me. I have Plan F, and even although I had had 2 major cardiac procedures, I haven't had to beg insurance to authorize anything or spent a penny out of pocket.
Advantage may save retirees when the are relatively young and healthy, but dealing with insurance authorization and copays when you're older, in physical and cognitive decline isn't something I would look forward too. Martha never mentions that: youtu.be/v5j7R8YmdWE?si=eeFQyoVZI_ZC6j0A

[yogibearbull]

@django , you made a good decision at the time to go with the top of the line Medigap Plan F. It was so good that it has been discontinued for new people, although people can remain on it (as you are). The next best now are Medigap Plan G or N. Unfortunately, many cannot afford these plans and sign up for cheaper Medigap plans (there are lots of them) not realizing that any upgrades will require medical underwriting. There is news about such sad cases too.

People have different situations. My employer group plan (while working) seamlessly changed first into the original Medicare + employer/retiree supplemental, and then to employer/retiree Medicare Advantage. The dependent coverage for my wife had a different change schedule, but those changes were seamless too. At each transition time, I looked around and evaluated whether I wanted to stay in the group, and so far I did, and am happy with it.

Those facing Medicare choices for the first time may checkout this primer, ybbpersonalfinance.proboards.com/thread/187/medicare

[mnfish]

Jan 28, 2024 12:50:03 GMT @django said:

As someone in poor health that signed up for Medicare, Medigap, Plan D at age 65, buying the most comprehensive insurance that I could afford made sense to me. I have Plan F, and even although I had had 2 major cardiac procedures, I haven't had to beg insurance to authorize anything or spent a penny out of pocket.
Advantage may save retirees when the are relatively young and healthy, but dealing with insurance authorization and copays when you're older, in physical and cognitive decline isn't something I would look forward too. Martha never mentions that: youtu.be/v5j7R8YmdWE?si=eeFQyoVZI_ZC6j0A

Does anyone consider the possibility that neither SSA nor Medicare wants you to live too long?

[catdog]

Just to be clear, if you buy a medicare advantage plan you cannot buy Medigap insurance.

catdog

[Deleted]

Jan 28, 2024 19:10:42 GMT catdog said:

Just to be clear, if you buy a medicare advantage plan you cannot buy Medigap insurance.

catdog

No you can if you can find a company that will insure you. Some states (mostly "blue") have laws that forbid "underwriting" but that tends to raise premiums for everyone. My state allows "underwriting" and my experience has been it's impossible for me to change plans except to what I consider inferior Advantage plans.

[gman57]

Jan 29, 2024 8:44:54 GMT @django said:

Jan 28, 2024 19:10:42 GMT catdog said:

Just to be clear, if you buy a medicare advantage plan you cannot buy Medigap insurance.

catdog

No you can if you can find a company that will insure you. Some states (mostly "blue") have laws that forbid "underwriting" but that tends to raise premiums for everyone. My state allows "underwriting" and my experience has been it's impossible for me to change plans except to what I consider inferior Advantage plans.

No you can't.   MA is all inclusive so you can't buy an MA plan and Medigap plan together.     If you switch from MA to traditional Medicare you can then purchase a Medigap plan **IF** you qualify.  I think that's what you meant. 

[Chahta]

Jan 29, 2024 13:32:20 GMT gman57 said:

Jan 29, 2024 8:44:54 GMT @django said:

No you can if you can find a company that will insure you. Some states (mostly "blue") have laws that forbid "underwriting" but that tends to raise premiums for everyone. My state allows "underwriting" and my experience has been it's impossible for me to change plans except to what I consider inferior Advantage plans.

No you can't.   MA is all inclusive so you can't buy an MA plan and Medigap plan together.     If you switch from MA to traditional Medicare you can then purchase a Medigap plan **IF** you qualify.  I think that's what you meant. 

Medigap insurance plans pay the 20% Part B does not pay. What exactly would Medigap plans pay for Part C?

[bizman]

Jan 29, 2024 14:44:08 GMT Chahta said:

Jan 29, 2024 13:32:20 GMT gman57 said:

No you can't.   MA is all inclusive so you can't buy an MA plan and Medigap plan together.     If you switch from MA to traditional Medicare you can then purchase a Medigap plan **IF** you qualify.  I think that's what you meant. 

Medigap insurance plans pay the 20% Part B does not pay. What exactly would Medigap plans pay for Part C?

I believe the issue is that while you can switch from regular Medicare with or without Medigap to Medicare Advantage without penalty, the problem comes in trying to do the reverse.  Switching from Medicare Advantage to regular Medicare means you are either stuck with a 20% copay to infinity, or you are subject to underwriting on the Medigap plan.  

It seems to me that MA plans are great as long as most of their people are healthy and don't use too much care, as their margins are not huge.  If more care is used, the price needs to go up and/or the costs need to come down.  I don't like the idea of my doctor (or medical system writ large) potentially needing to deny me cutting edge care in order to make ends meet.  

Which is why I will definitely choose regular Medicare with a Medigap plan out of the gate and stick with it.  I'm not looking to chase illusory cheapness that could cost me huge money and/or circumscribed care in the long run.

[anovice]

"I believe the issue is that while you can switch from regular Medicare with or without Medigap to Medicare Advantage without penalty, the problem comes in trying to do the reverse. Switching from Medicare Advantage to regular Medicare means you are either stuck with a 20% copay to infinity, or you are subject to underwriting on the Medigap plan."

There are a few states that march to their own drums and have some sort of guaranteed issue protections. I believe they are New York, Connecticut, Washington, and Maine. And then, each of them has differences. This is New York.

www.medicareinteractive.org/get-answers/medicare-health-coverage-options/supplemental-insurance-for-original-medicare-medigaps/medigaps-in-new-york-state

[Chahta]

Jan 30, 2024 0:18:19 GMT anovice said:

"I believe the issue is that while you can switch from regular Medicare with or without Medigap to Medicare Advantage without penalty, the problem comes in trying to do the reverse. Switching from Medicare Advantage to regular Medicare means you are either stuck with a 20% copay to infinity, or you are subject to underwriting on the Medigap plan."

There are a few states that march to their own drums and have some sort of guaranteed issue protections. I believe they are New York, Connecticut, Washington, and Maine. And then, each of them has differences. This is New York.

www.medicareinteractive.org/get-answers/medicare-health-coverage-options/supplemental-insurance-for-original-medicare-medigaps/medigaps-in-new-york-state

Underwriting is only allowed to look 2 years back. If you are changing might be best to time it with the help of a specialist broker in medigap plans.