Barron’s Weekend Summary: Cover story says a number of Berkshire Hathaway’s issues could be resolved in a post-Buffett era; Increased regulation of the tech industry is starting to hurt
* Cover story: When Warren Buffett turns 90 years old in August, it would be only natural for Berkshire Hathaway shareholders to worry about the future of the extraordinary company he built, but those who fear for the future of a Buffett-less Berkshire may be shortchanging the company and its shares; A number of issues could be resolved in a post-Buffett era—many investors think new leadership could break up the conglomerate to unlock value, or at least be more amenable to the idea, which Buffett opposes.
* Tech Trader: +/- AAPL, AMZN, FB, GOOGL, MSFT: So far investors seem largely unperturbed by criticism of big tech from regulators, legislators, activists, and presidential candidates, but there are signs regulation is starting to hurt—just as governmental agencies push for more. Trader: Lori Calvasina, head of US equity strategy at RBC Capital Markets, expects 2020 to be a turbulent year—but there’s just as much risk to selling and watching stocks continue to run as there is in holding on too long; +/- CGC, ACB, TLRY: Some of the biggest cannabis companies in the US and Canada could burn through their cash balances in a matter of months unless they raise funds or cut spending, according to research from Ello Capital.
* Profile: Daniel Boston and Kabir Goyal, co-managers of the Brown Capital Management International Small Company fund, focus on companies with strong, sustainable revenue growth; they define company size in terms of revenue as opposed to market capitalization, and the fund invests only in companies with revenues of less than $500M (top 10 holdings: Descartes Systems Group, M3, CYBR, Evotec, Kinaxis, Abcam, Dechra Pharmaceuticals, SimCorp, Albioma, REA Group).
* Features: 1) +/- Berkshire Hathaway: Writer Andrew Bary looks back at his coverage of the company for Barron’s over the years, and says that with chief Warren Buffett turning 90 this year, the next few years promise to be fascinating, and could well include a long-awaited CEO succession; 2) + COG, LNG: Absent a ban on fracking in the US, which multiple Democratic presidential candidates have proposed, excess natural gas supply will probably depress prices for years, making most of the industry’s stocks poor investments, with the exception of Cabot and Cheniere; 3) Barron’s list of the Best Fund Families for 2019 is based purely on the performance of their actively managed funds, and is topped by MFS Investment Management, Virtus Investment Partners, DWS Group, Columbia Threadneedle Investments, and Principal Global Investors; 4) Fallout from the coronavirus outbreak won’t be limited to companies heavily reliant on China for sales, or those that operate facilities in Wuhan—disruptions could ripple through an array of industries and hurt sales and earnings, possibly throughout the year, with consumer goods, industrials, and tech likely to take a hit.
* European Trader: Positive on LYG: Investors looking to bet on a post-Brexit boost to Britain’s economy should consider buying shares in the UK–based financial powerhouse, whose stock is cheap, is highly geared to the British economy, and offers a hefty dividend.
* Emerging Markets: Communist China will still be here when the coronavirus peters out, its economy will still be gaining ground on the US in gross output and advanced technology, and president Xi Jinping will still be in power—the notion that Beijing faces a “Chernobyl moment that could alter its destiny or leadership looks considerably exaggerated.”
* Commodities: “Silver has fared better than some of its metal peers against the backdrop of a disease-threatened global economy, in part because of its dual role as both a precious and industrial metal.”
* Streetwise: “Bitcoin has tiptoed back above $10,000, from $4,000 a year ago, and I have two questions,” says columnist Jack Hough. “The first is why it isn’t yet hitting new highs above $20,000. The second is why it isn’t worth zero.”