Barrons weekend summary: Cover looks at opportunities in the FAANG stocks; positive features on to US financial firms; cautious on FB, IGCC
* Cover story: The FAANG stocks—FB, AAPL, AMZN, NFLX, and GOOGL—have lost $1.1T since their peaks, part of which may have been the result of herd behavior; The selloff creates an opportunity for investors to reassess them, because the next opportunity for the FAANGs could come from picking them apart and judging each on its own merits.
* Tech Trader: A new kind of lending has emerged in fintech: Affirm, launched by PYPL co-founder Max Levchin and others, allows users to pay online for goods with the repayment schedule of an installment loan, based on a new process for gauging credit risk.
* Trader: “Investors are fearful that 2019 earnings estimates won’t pan out because of potential global economic weakness, but some reduction in growth already seems discounted in the market”; Bankers are concerned that corporate leverage could trigger the next recession, and Fed chairman Jerome Powell has called out non-financial corporate debt as something to watch; Cautious on TGT: Shares are down after the retailer fell short of same-store sales and earnings estimates, but it’s unlikely the problem is as bad as investors think, and the shares are now a bargain.
* Interview: Jamie Zimmerman of Lifespeed Mananagemet, which specializes in event-driven investing, seeks to profit from asset mispricings from mergers, spinoffs, and bankruptcy filings.
* Profile: Jamie Cuellar, co-manager of the Buffalo Small Cap fund, looks for companies that benefit from long-term trends, such as cost-containment in healthcare and software-as-a-service (top 10 holdings: TWLO, CXW, MTZ, MIME, MDSO, HQY, HMSY, CONE, EGHT, RGEN).
* Features: 1) Cautious on FB: Barron’s likes the stock despite recent controversies, with two caveats: there are concerns about its changing user base and how that will affect selling ads, and it’s possible that recent markdowns could prove to be a lasting reset, not a dip; 2) Positive on WFC, USB, GS, PNC, BK, JPM, BAC: Berkshire Hathaway owns shares in seven of the country’s top 10 banks, a sign the sector offers value because they are less cyclical than other stocks and have more resilient earnings; 3) Early data from CFRA indicated that while it’s still early in the shopping season, hot consumer items—including electronic goods and apparel—are selling fast over the Thanksgiving weekend; 4) Positive on Curaleaf Holdings: As prohibitions against marijuana are relaxed across the U.S. and companies race to obtain licenses and locations, Russia-based Curaleaf is the best funded, though Canadian and U.S. counterparts are catching up; 5) Cautious on
* IGCC: Company that combines cannabis and blockchain isn’t living up to expectations, and negative details are emerging that are raising questions about its viability.
* European Trader: Positive on Advanced Metallurgical Group: Investors who recently soured on lithium sent shares down, and they look cheap, especially given the company’s expanding profit margins.
* Emerging Markets: Russia has a host of problems, but an oil-price correction isn’t among them—that’s the message the Kremlin is sending in response to Saudi Arabia’s latest call for exporters to unite on a production cut.
* Commodities: Emerging markets such as China and Saudi Arabia are expected to boost demand for uranium, creating significant growth prospects for the sector and benefiting companies such as Kazatomprom.
* Streetwise: Investors who opened cryptocurrency trading accounts during the past year are underwater, and most financial institutions are keeping quiet about their Bitcoin ambitions