Post by yogibearbull on Aug 28, 2021 16:38:58 GMT
Pg 10-11.
REVIEW. A California Superior Court (county level) has struck down the CA Proposition 22 Law (effective 12/16/20) related to RIDESHARING companies (UBER, LYFT). This Law made drivers independent contractors, allowed limited company benefits but not access to workman comp. It is unclear whether the Court ruling can be overturned on appeal. There are also other lawsuits claiming that there was a presumption of drivers being company employees until 12/16/20 and that companies owe millions/billions to drivers (in wages and benefits) and State (in taxes). Company liabilities skyrocket if the Court ruling is sustained. These issues are also applicable to other gig workers.
PREVIEW. After 25-day quiet post-IPO period ended for Robinhood/HOOD, 10 analysts were split in their opinions: 4 Buy, 5 Hold, 1 Sell; price targets range from $35-63. Concerns include unprofitable growth; low account balances; controversial payments for order flow (regulators may limit or ban it).
DATA THIS WEEK. Pending home sales on MONDAY; ISM Chicago Business Barometer, home price index, consumer confidence on TUESDAY; ADP national employment report, ISM manufacturing PMI, construction spending on WEDNESDAY; international trade deficit on THURSDAY; ISM services PMI, jobs report (+746,500 to +781,500), unemployment rate (5.2%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Plastics giant Barry Global (BERY; fwd P/E 10; debt/EBITDA 3.9 (high); focusing on reusable/recyclable plastics due to backlash from single-use plastic containers; been through M&A/restructuring but now focusing on organic growth; even replaced “Plastics” with “Global” in its name in 2017; pg 14);
Plantronics (POLY; fwd P/E 7.8 (2023); fwd P/S 0.7 (2023); office and conference room products (audio and video) business should be doing well but there are issues; it is still suffering from poor 2018 acquisition of Polycom; new CEO SHULL since 09/2020 and he has made several management changes; faces component shortages (chips, sensors, LCD screens) due to supply-chain issues and higher shipping costs and those may not return to normal until 2023 (that is why fwd est are for 2023); SLMCX owns 9%; pg 15).
BEARISH. See other stories.
Pg 9: FOLLOWUP. Antitrust trial on Illumina’s/LMN acquisition of private Grail has started. The acquisition has closed but the companies will operate as separate entities until the trial is over. The FTC has argued that this acquisition will reduce competition in cancer screening/testing area. Illumina is promising to share key technologies with its competitors, several of whom will also testify at the trial.
Pg 12: POWELL said at Jackson Hole that QE TAPER time is near – later this year depending on economy and Covid-19-Delta. His speech pleased everybody but was really lacking in specifics. He noted several issues but also offered explanations on why those weren’t major issues (inflation, jobs, Covid-19). He had his cake and ate it too or had it both ways (like a 2-handed economist). New Fed emphasis on data means that the Fed will be behind the curve. He noted that rate hikes much later (2022 or 2023) would be disconnected from the QE taper. Powell was definitely dovish. (His term expires in early-February 2022 and YELLEN is supporting his renomination)
Pg 20: Cover story supplement – how to buy CHINESE stocks? 250 Chinese ADRs (still valued at $1.3 trillion after sharp selloff) listed in the US are only interests in offshore VIEs that are being targeted by both the US and China. Some of these have dual-listed in HK (H-shares) or China Mainland (A-shares), but others may have to go private. Most institutional holders have shifted from these US ADRs to their corresponding H-shares or A-shares, but retail investors face hurdles due to limited access at brokerages to foreign-listed shares. In general, Fidelity, Interactive Brokers, Schwab, Vanguard charge extra fees for foreign-listed shares but only H-shares may be available and those need HK$ to trade; only Interactive Brokers among these allows A-shares. For most retail investors, funds are the way to go: ASHR, KBA, CNYA, FXI, GXC, etc.
Pg 21: SPACs have gone from red hot (2020/H2-2021/Q1) to ice cold. Regulators did their part with the SEC issuing a letter on April 12 on the accounting treatment of SPAC warrants and deals. Several recent SPAC mergers had to restate financials and many SPACs have adjusted terms of their forthcoming deals. The SPAC enthusiasts say that this is temporary, and the SPACs deals may rebound later this year, although not to their prior levels.
Pg 22: FUNDS. Brian BARISH of value CAMOX (ER 0.84%; AUM $363 million, small for 23-yr old fund) uses relative-value approach, so some holdings look expensive from traditional value perspective. Some stocks are quality-stocks that have sold off on some news or event and he buys when their upside becomes better than the downside. Barish is also President and CIO of Cambiar Investors.
Pg 24: American Funds’ Capital Group joined the ETF parade by announcing launch of 6 active-transparent ETFs (AT; SEC Rule 6c-11) for 2022/Q1 that will complement (not clone) its mutual funds: Growth CGGR, core equity CGUS, dividend CGDV, international CGXU, global growth CGGO, core plus bond CGCP. These transparent ETFs will invest in highly liquid stocks for which the issue of front-running may be moot. Recent DFA ETFs are also similar in design (active-transparent or AT; Rule 6c-11). The new SEC rules restrict active-nontransparent ETFs (ANTs from American Century Fido, Price, Natixix, etc) to stocks that trade concurrently on the US and non-US exchanges, so that excludes most foreign stocks. However, these active-transparent ETFs (ATs) can invest more globally.
Pg 25: TECH TRADER. Strong demand for PCs during the pandemic has helped Apple/AAPL, DELL (upcoming spinoff of VMware/VMW), HP Inc/HPQ, Logitech/LOGI. But PC demand may slow post-pandemic; there may be some pickup on the commercial server side. The current semi chips shortage is also hurting sales.
Pg 26: INCOME. There are only a few income-oriented ESG funds (only 8 of 439 ESG funds in M* ESG database) such as mutual funds GCFBX, FKIQX (high ESG score) and ETF ESGS. These funds are underweighted in energy and utilities but overweight in tech and healthcare.
Pg 27: 100 YEARS OF BARRON’s traces developments in the HOUSING industry: Home electrification after 1937; early competition between home and car buying that had setback in 1930s; housing boom post WW II; era of mass-produced homes; moves to suburbia; evolution of strip malls, gas stations, fast-food chains, motels/hotels; housing booms and busts; financial crisis of 2008-09 due to mortgage industry excesses; sizzling housing market now.
Pg 28: Doug RAMSEY, CIO Leuthold and Comanager of TAA LCORX and Global GLBLX. His indicators are flashing yellow (he has traffic-style lights in his office), but he is not bearish. The US market is expensive now, close to the dot. com bubble level; a 20% drop would just bring it to normal valuation levels. The US stock market is now huge relative to the US GDP. The Covid RECESSION in 2020 was deep and short, but the FED has been easy for quite a while. This RECOVERY has been uneven and unusual. Record EARNINGS are from demand of several years pulled forward, so those earnings are not sustainable. TAA fund LCORX has net equity exposure of only 53% now. The non-US valuations seem reasonable and global GLBLX has 55% net equity exposure. Both funds have more small/mid-caps. Attractive areas now are investment banking, semiconductor equipment, homebuilders.
Pg 30: OTHER VOICES. Paul POLMAN, former CEO of Unilever (2009-19); UN-appointed Advocate for Sustainable Development. Forthcoming new book, “Net Positive: How Courageous Companies Can Thrive by Giving More Than They Take” with coauthor Andrew WINSTON, October 2021. He says that CLIMATE CHANGE is real and may cause catastrophes due to extreme weather. He is concerned that big global BANKS continue to support fossil fuel industry – almost $4 trillion in bonds and loans vs only $203 billion for renewable energy. This exposes banks to future liabilities and reputational risks. He wants corporate CEOs to become activists. Companies have concentric circles of influence, and that influence diminishes as one moves outwards. He says that companies should be aware of sustainability and ESG at all levels. He thinks that big global banks are lacking on this and need a push from other big businesses. (Controversial Larry FINK of BlackRock may be his model CEO?)
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK
REVIEW. A California Superior Court (county level) has struck down the CA Proposition 22 Law (effective 12/16/20) related to RIDESHARING companies (UBER, LYFT). This Law made drivers independent contractors, allowed limited company benefits but not access to workman comp. It is unclear whether the Court ruling can be overturned on appeal. There are also other lawsuits claiming that there was a presumption of drivers being company employees until 12/16/20 and that companies owe millions/billions to drivers (in wages and benefits) and State (in taxes). Company liabilities skyrocket if the Court ruling is sustained. These issues are also applicable to other gig workers.
PREVIEW. After 25-day quiet post-IPO period ended for Robinhood/HOOD, 10 analysts were split in their opinions: 4 Buy, 5 Hold, 1 Sell; price targets range from $35-63. Concerns include unprofitable growth; low account balances; controversial payments for order flow (regulators may limit or ban it).
DATA THIS WEEK. Pending home sales on MONDAY; ISM Chicago Business Barometer, home price index, consumer confidence on TUESDAY; ADP national employment report, ISM manufacturing PMI, construction spending on WEDNESDAY; international trade deficit on THURSDAY; ISM services PMI, jobs report (+746,500 to +781,500), unemployment rate (5.2%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Plastics giant Barry Global (BERY; fwd P/E 10; debt/EBITDA 3.9 (high); focusing on reusable/recyclable plastics due to backlash from single-use plastic containers; been through M&A/restructuring but now focusing on organic growth; even replaced “Plastics” with “Global” in its name in 2017; pg 14);
Plantronics (POLY; fwd P/E 7.8 (2023); fwd P/S 0.7 (2023); office and conference room products (audio and video) business should be doing well but there are issues; it is still suffering from poor 2018 acquisition of Polycom; new CEO SHULL since 09/2020 and he has made several management changes; faces component shortages (chips, sensors, LCD screens) due to supply-chain issues and higher shipping costs and those may not return to normal until 2023 (that is why fwd est are for 2023); SLMCX owns 9%; pg 15).
BEARISH. See other stories.
Pg 9: FOLLOWUP. Antitrust trial on Illumina’s/LMN acquisition of private Grail has started. The acquisition has closed but the companies will operate as separate entities until the trial is over. The FTC has argued that this acquisition will reduce competition in cancer screening/testing area. Illumina is promising to share key technologies with its competitors, several of whom will also testify at the trial.
Pg 12: POWELL said at Jackson Hole that QE TAPER time is near – later this year depending on economy and Covid-19-Delta. His speech pleased everybody but was really lacking in specifics. He noted several issues but also offered explanations on why those weren’t major issues (inflation, jobs, Covid-19). He had his cake and ate it too or had it both ways (like a 2-handed economist). New Fed emphasis on data means that the Fed will be behind the curve. He noted that rate hikes much later (2022 or 2023) would be disconnected from the QE taper. Powell was definitely dovish. (His term expires in early-February 2022 and YELLEN is supporting his renomination)
Pg 20: Cover story supplement – how to buy CHINESE stocks? 250 Chinese ADRs (still valued at $1.3 trillion after sharp selloff) listed in the US are only interests in offshore VIEs that are being targeted by both the US and China. Some of these have dual-listed in HK (H-shares) or China Mainland (A-shares), but others may have to go private. Most institutional holders have shifted from these US ADRs to their corresponding H-shares or A-shares, but retail investors face hurdles due to limited access at brokerages to foreign-listed shares. In general, Fidelity, Interactive Brokers, Schwab, Vanguard charge extra fees for foreign-listed shares but only H-shares may be available and those need HK$ to trade; only Interactive Brokers among these allows A-shares. For most retail investors, funds are the way to go: ASHR, KBA, CNYA, FXI, GXC, etc.
Pg 21: SPACs have gone from red hot (2020/H2-2021/Q1) to ice cold. Regulators did their part with the SEC issuing a letter on April 12 on the accounting treatment of SPAC warrants and deals. Several recent SPAC mergers had to restate financials and many SPACs have adjusted terms of their forthcoming deals. The SPAC enthusiasts say that this is temporary, and the SPACs deals may rebound later this year, although not to their prior levels.
Pg 22: FUNDS. Brian BARISH of value CAMOX (ER 0.84%; AUM $363 million, small for 23-yr old fund) uses relative-value approach, so some holdings look expensive from traditional value perspective. Some stocks are quality-stocks that have sold off on some news or event and he buys when their upside becomes better than the downside. Barish is also President and CIO of Cambiar Investors.
Pg 24: American Funds’ Capital Group joined the ETF parade by announcing launch of 6 active-transparent ETFs (AT; SEC Rule 6c-11) for 2022/Q1 that will complement (not clone) its mutual funds: Growth CGGR, core equity CGUS, dividend CGDV, international CGXU, global growth CGGO, core plus bond CGCP. These transparent ETFs will invest in highly liquid stocks for which the issue of front-running may be moot. Recent DFA ETFs are also similar in design (active-transparent or AT; Rule 6c-11). The new SEC rules restrict active-nontransparent ETFs (ANTs from American Century Fido, Price, Natixix, etc) to stocks that trade concurrently on the US and non-US exchanges, so that excludes most foreign stocks. However, these active-transparent ETFs (ATs) can invest more globally.
Pg 25: TECH TRADER. Strong demand for PCs during the pandemic has helped Apple/AAPL, DELL (upcoming spinoff of VMware/VMW), HP Inc/HPQ, Logitech/LOGI. But PC demand may slow post-pandemic; there may be some pickup on the commercial server side. The current semi chips shortage is also hurting sales.
Pg 26: INCOME. There are only a few income-oriented ESG funds (only 8 of 439 ESG funds in M* ESG database) such as mutual funds GCFBX, FKIQX (high ESG score) and ETF ESGS. These funds are underweighted in energy and utilities but overweight in tech and healthcare.
Pg 27: 100 YEARS OF BARRON’s traces developments in the HOUSING industry: Home electrification after 1937; early competition between home and car buying that had setback in 1930s; housing boom post WW II; era of mass-produced homes; moves to suburbia; evolution of strip malls, gas stations, fast-food chains, motels/hotels; housing booms and busts; financial crisis of 2008-09 due to mortgage industry excesses; sizzling housing market now.
Pg 28: Doug RAMSEY, CIO Leuthold and Comanager of TAA LCORX and Global GLBLX. His indicators are flashing yellow (he has traffic-style lights in his office), but he is not bearish. The US market is expensive now, close to the dot. com bubble level; a 20% drop would just bring it to normal valuation levels. The US stock market is now huge relative to the US GDP. The Covid RECESSION in 2020 was deep and short, but the FED has been easy for quite a while. This RECOVERY has been uneven and unusual. Record EARNINGS are from demand of several years pulled forward, so those earnings are not sustainable. TAA fund LCORX has net equity exposure of only 53% now. The non-US valuations seem reasonable and global GLBLX has 55% net equity exposure. Both funds have more small/mid-caps. Attractive areas now are investment banking, semiconductor equipment, homebuilders.
Pg 30: OTHER VOICES. Paul POLMAN, former CEO of Unilever (2009-19); UN-appointed Advocate for Sustainable Development. Forthcoming new book, “Net Positive: How Courageous Companies Can Thrive by Giving More Than They Take” with coauthor Andrew WINSTON, October 2021. He says that CLIMATE CHANGE is real and may cause catastrophes due to extreme weather. He is concerned that big global BANKS continue to support fossil fuel industry – almost $4 trillion in bonds and loans vs only $203 billion for renewable energy. This exposes banks to future liabilities and reputational risks. He wants corporate CEOs to become activists. Companies have concentric circles of influence, and that influence diminishes as one moves outwards. He says that companies should be aware of sustainability and ESG at all levels. He thinks that big global banks are lacking on this and need a push from other big businesses. (Controversial Larry FINK of BlackRock may be his model CEO?)
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK
