Barron's Saturday Summary: Cautious on HPQ, DRI, CHS, SCTY; Positive on BHI, ARCP, COF
- Cover story: In special Penta section, writer Paul Theroux looks at why philanthropy is failing in Africa, noting the country is worse off than it was 50 years ago, partly because of the $63B in aid it receives every year from foundations led by Bill Clinton, Bill Gates, Bono, and other high-profile donors, which keeps country from solving problems itself; Other stories report on lessons from the collapse of private jet operator Avantair; why top private banking services are drawing in more clients, assets, and profits; smart moves investors can make at the end of the year; and why the wealthy are combining trusts with donor-advised funds.
- Tech Trader: Cautious on HPQ: Tiernan Ray says that despite chief Meg Whitmans good work, company remains tied to its PC business at a time when the category is in decline, and its various parts dont seem to augment each other. - Trader: Positive on BHI: Long seen as the weak player in a sector dominated by SLB and HAL, trends at company are going the right way, and share price should respond; Positive on ARCP: Shares have dropped in wake of Fed talk about tapering, but though they trade at a discount to its rivals, they could rise 20-40% as companys merger with COLE narrows valuation gap. - Follow-Up: Cautious on SCTY: Solar panel company consistently reports higher values for its panels than competitors, enlarging the federal tax benefits it receives, and barring solid clarification of its process, investors should steer clear.
Features: 1) Positive on COF: Bank used its financial might to buy U.S. regional banks and later to acquire assets of European lenders, and if company follows through with cost-cutting and buybacks shares could rise more than 17%. 2) Positive on DAL, GM, HPQ, OI, PBI, SWY: History suggests its a good time to shop for turnaround stocks, shares of these six companies could be long-term winners if management can improve results. 3) Cautious on DRI, CHS: A look at how activist investors Barrington Capital and Blue Harbour are seeking to create change at restaurant chains, coupled with profiles of five successful activist investors less well-known than Carl Icahn and Bill Ackman (Clifton Robbins, Blue Harbour Group; Richard McGuire, Marcato Capital Management; Jeffrey Smith, Starboard Value; Ralph Whitworth, Relational Investors; Gregory Taxin, Clinton Group). - Mutual Funds: Interview with Meggan Walsh, Portfolio Manager, Invesco Diversified Dividend Fund (top ten holdings: GIS, Heineken, WAG, KMB, RTN, STI, ZION, KFRT, SYY, T); Interview with Jeffrey Gundlach, CEO of DoubleLine Capital, and Robert Shiller, Economics Professor at Yale University, who discuss the stock market, housing bubbles, and other current issues. - European Trader: Positive on Uniqa: Company is putting together a compelling restructuring play that should strike a chord with investors by unlocking value and creating a path to profitable growth. - Asian Trader: Chinese insurers are in a sweet spot because of urbanization, demographics, rising affluence, and ability to offer a broad range of products, says Mansfield Mok of EFC Asset Management (Positive on China Life, New China Life). - Emerging Markets: Moroccan stocks are linked to European economic growth thanks to classification in MSCIs Frontier Market Index (Positive on Addoha, Maroc Telecom). - Commodities: A number of long-term factors are boosting leads outlook, including dwindling supply and more rivalry to acquire it. - CEO Spotlight: TTWO chief Strauss Zelnick hopes new consoles from SNE and MSFT will be positive for sales of companys games, but says it is hedging its bets with other projects. - Streetwise: With offer for FNMA and FMCC, Fairholme is essentially saying If you wont restore our dividend, pay us off at par, then give us the keys to the firms most important businesses for free, says columnist Jonathan Laing, calling the offer risible.