Barron's Weekend Summary: Cover story reports on the complex opioid supply chain; Positive feature on REAL; Tech Trader says Softbank shares are highly discounted
* Cover story: Shipping tens of billions of prescription opioid pills to America’s pharmacies happened through complex supply chains involving various suppliers, drugmakers, distributors, and pharmacies—including JNJ, TEVA, CAH, and CVS—which now face a morass of intersecting opioid lawsuits, saddling them with expenses and future litigation that is highly political.
* Tech Trader: Positive on Softbank: Company’s value is 46% below the sum-of-its parts total, making it one of the most highly discounted publicly traded assets; its primary problems lie with the Vision Fund, which owns stakes in WORK, UBER, and We Company, all of which face major challenges—though the math still works powerfully against a Softbank bear case.
* Trader: The Fed never wants to appear as if it doesn’t have an answer, but even its own members can’t decide whether it should be cutting more or standing pat, so maybe the best it can do is what the market expects it to do; The market is telling us that climate change matters, so we can either listen—or just wait for the next bear market; For now, investors shouldn’t expect normally reliable foreign buyers to bid for U.S. bonds—the money-market tumult raises currency hedging costs for the U.S. dollar and reduces the yield that international investors can earn in U.S. markets.
* Profile: Story looks at Nicole Kornitzer, co-manager of the $374M Buffalo International fund, which has returned an average of 7.5% a year over the past decade, better than 83% of its foreign large-growth peers and well ahead of its benchmark (top 10 holdings: Sartorius Stedim Biotech, SAP, Kering, AON, LIN, Carl Zeiss Meditec, Schneider Electric, Tomra Systems, LCMH Moet Hennessy, IBN).
* Features: 1) The recent attacks on Saudi Arabian oil infrastructure offer three lessons: such facilities are vulnerable to new kinds of attacks; oil should get a longer-term bump of $3 to $5 to account for new geopolitical risks; and it will take a more fundamental shift in the markets to change recent trading patterns; 2) Positive on REAL: The company, which launched one of the year’s more under-the-radar initial public offerings, has professionalized the market for used luxury goods, and its approach has built trust with buyers, who don’t have to worry about counterfeits—and are willing to pay a premium for the service; 3) Positive on MSFT, JNJ, EHC, FANG, FB, Comcast, DAL: Barron’s screened to find seven stocks for the “economically agnostic,” offering GARR (growth at reduced risk) and/or SWAG (safety without avoiding growth)—in other words, stocks have core businesses robust enough to survive economic turbulence; 4) There’s a long-term risk looming in the $3.8T municipal bond market: Climate change raises the credit risk of an issuer by damaging its assets and tax base, with probably losers including the Gulf Coast, the South Atlantic seaboard, and Arizona.
* European Trader: Positive on Ferguson: UK-based plumbing and heating firm has been undervalued due to poor performance at its British business, but activist investor Nelson Peltz of Trian Partners hopes to split up the company and focus more on its profitable U.S. arm, which generates 90% of sales.
* Emerging Markets: Saudi Arabian markets weren’t rattled by the attacks on the kingdom’s oil platforms, partly because Saudi shares were already down 15% since May amid fading enthusiasm for the country’s move to join MSCI’s global emerging markets index.
* Commodities: “The attacks on Saudi oil facilities may have only briefly sliced daily crude output from the kingdom by more than half, but the risk remains to supplies from one of the world’s biggest exporters—and to the oil-rich Middle East.”
* Streetwise: For now, investors should be skeptical about reports that describe various streaming services as “winning” rights to key shows—the winners might turn out to be the sellers, and today’s prices, a peak, says columnist Jack Hough.