Barron’s Weekend Summary: Cover story reports on the 100 best annuities based on various metrics; An Arm Holdings IPO would end the drought in hardware listings in the tech sector
* Cover story: Barron’s list of the 100 Best Annuities; “For nervous investors looking to tuck some guarantees into their portfolios against this backdrop of uncertainty—whether it be downside protection, a fixed rate of return with upside potential, or a steady income stream for life—more independent financial advisors are recommending a product they once eschewed: annuities”; Barron’s offers a list of the top annuities in several categories: Guaranteed Income, No Frills; Deferred Income Annuities; Guaranteed Income with Some Liquidity and Growth Potential; Downside Protection with Stock-Like Returns; and Tax Deferred Savings.
* Tech Trader: A rebound in tech IPOs has largely been the result of software and cloud companies listing, but while hardware startups have remained on the sidelines—the last time a major chip company went public was nearly a decade ago—the dry spell could end if SoftBank launches an IPO of Arm Holdings, which farms out manufacturing of its designs, making it an intellectual property play as well.
* Trader: Signs are emerging that investors are growing less enamored of tech stocks—several metrics offer warnings signs about the historic run in the sector, and investors are unlikely to see stocks continue to move higher uninterrupted; Positive on WFC: Though the bank has much to fix, its stock is cheap relative to its peers, and while there’s no guarantee that Wells can engineer a turnaround quickly, it’s a potentially good comeback story for investors.
* Interview: Dan Clifton, the head of Strategas Research Partners’ policy research unit, expects that a new round of economic stimulus to address the effects of pandemic will be completed by the end of July, and talks about why the market is forecasting a Joe Biden presidency.
* Profile: Jim Madden, portfolio manager of the Trillium ESG Global Equity fund, says trying to make macro forecasts or calling a top or bottom to the market is detrimental to managing money; the fund integrates ESG and financial metrics, looking for high-quality companies with the ability to grow (top 10 holdings: MSFT, AAPL, GOOGL, PYPL, ADBE, Roche Holding, V, TSM, MSCI, NVDA).
* Features: 1) Positive on MSCI: Shares have rallied 45 percent this year and trade for 47 times 2021 estimated earnings; revenue from index licensing and related fees is expected to grow at an annual rate of nine percent over the next four years, and while a stumble could send shares down, they likely have more upside; 2) A look at various index providers, which “set the rules by which companies are admitted to stock indexes—rules related to market-capitalization, corporate domicile, and financial viability, for example—thereby influencing asset flows, demand for individual securities, and in many cases, the composition of our portfolios”; 3) Positive on DG, DLTR: For many of the more than 30 million Americans relying on unemployment benefits because of the coronavirus pandemic, dollar stores, which are focused on value, are the only option for many goods—and for investors they are a growth story when other retailers are not; 4) Story on Barron’s list of the Top 100 Women Advisors of 2020 says that “less than 20 percent of the industry’s financial advisors are women, a number that remains stubbornly stuck, even after two decades of gender-equity initiatives by the largest wealth management firms"; The list is topped by Kimberlee Orth of Ameriprise Financial Services, Karen McDonald of Morgan Stanley Wealth Management, and Stephanie Stiefel of Neuberger Berman; 5) Positive on GHC: The low-profile diversified holding company run by the Graham family, former owners of the Washington Post, “amounts to an undervalued, small-scale Berkshire with a good chance of a positive catalyst in a potential TV spinoff,” and it has a dividend yield of 1.6 percent; 6) A coronavirus vaccine authorization before November 3 could be a big political win for the Trump administration, which has made the rapid development of a vaccine the cornerstone of its pandemic response, but former FDA officials warn that such an October surprise could undermine trust in the vaccine and kneecap a recovery.
* Top 100 Women: Barron’s profiles some of the women on its list of the Top 100 Women Advisors, including Leslie Lauer, manager of the Employee Stock Ownership Plan Group at UBS; Elizabeth Weikes, principal with The Weikes Group in J.P. Morgan Securities’ wealth management division; Johanna Walters, a partner at Merrill Lynch’s Walters Bailey Associates; Barbara Yee, the founder of NY Pine Group at Morgan Stanley; Lee DeLorenzo of United Asset Strategies; Tracey Gluck, founder of J.P. Morgan’s The Gluck Group; Judith Lee, president of Merrill Lynch’s Women’s Exchange; and Carla Harris, vice chairman and managing director at Morgan Stanley.
* Follow-Up: Positive on GS: The firm’s blowout quarter wasn’t a fluke, and it is the rare big financial company with an improving business and earnings outlook, and a stock that looks reasonably priced at little more than 10 times forward earnings and at tangible book value.
* European Trader: Positive on Tele2: The company, which provides mobile and fixed-line services in Sweden, and is active in Estonia, Germany, Latvia, and Lithuania, saw lower revenues from roaming fees as locked-down customers stopped traveling during the pandemic, but because more than 80 percent of its revenues come from the stable Swedish market, it is well-positioned for a comeback.
* Commodities: “More than two years after China’s launch of yuan-denominated crude-oil futures, global interest in the contracts has seen a notable increase—but analysts don’t expect the contracts to become widely used anytime soon, citing challenges linked to currency and availability to international traders.”
* Streetwise: “Stockflation seems likely—this past week the S&P 500 index briefly erased its losses for the year, even though second-quarter earnings will be grisly, and the pace of recovery is uncertain,” says columnist Jack Hough. “The promise of very low interest rates for years to come helps explain the appeal of stocks, even at elevated valuations.”