Barron’s Weekend Summary: Cover story says legacy tech companies are struggling to remain relevant in the age of cloud computing and AI; Wall Street is bullish on Bitcoin, but investors aren’t interested
* Cover story: Tech stocks are having their best year in a decade, with investors increasingly excited about future opportunities in the cloud, artificial intelligence, and data analytics—but the buzz surrounding these sectors has left legacy companies such as CSCO, IBM, INTC, ORCL, STX, WDC, XRX, HPQ, and HPE struggling to remain relevant.
* Tech Trader: Wall Street continues to embrace Bitcoin—the New York Stock Exchange launched Bitcoin futures trading and Fidelity expanded its Bitcoin custody business—but the digital currency isn’t very useful for day-to-day transactions, and many investors don’t seem interested in it despite Wall Street’s bullish stance.
* Trader: Tobias Levkovich, chief equity strategist at Citi Research, says that he doesn’t think investors are overly bullish in their outlooks, the market’s rally notwithstanding; Positive on GOOS: Though sales growth has stalled and shares are down, investors should give the company a second look—its coats are must-haves for a certain segment of the population, and its ability to build on that demand could set it apart from competitors; In today’s landscape, when machines are taking over trading, “It might seem like folly to trade around positions, but there are a few instances when getting aggressive makes sense.”
* Profile: Mike Collins, one of four senior portfolio managers overseeing the PGIM Total Return Bond fund, says one of the team’s longstanding calls has been “lower for longer” interest rates; The fund seeks to provide one-stop shopping for fixed-income investors and deliver returns that are 1.5 percentage points better than the Bloomberg Barclays U.S. Aggregate Bond Index before fees.
* Interview: Steve Tananbaum, founding partner of hedge-fund firm Golden Tree Asset Management, looks for catalysts such as debt restructurings, and sees a world where many asset classes are expensive, including high-yield bonds, investment-grade bonds, and stocks.
* Features: 1) Positive on SKT: The outlet landlord, one of the nation’s largest, hasn’t been immune to industry trends, but its malls have flourished off exit ramps in the U.S. and Canada, even as the so-called retail apocalypse has hammered bricks-and-mortar stores—but a drop in the share price presents an opportunity for bargain hunters; 2) Tech mergers and acquisitions are no replacement for innovation, but that has never stopped tech companies from trying to buy their way into the future—as HPE recently did with Cray and XRX is trying to do with HPQ—even though the track record for such deals is spotty; 3) Positive on SU: Canada’s largest integrated energy company has enormous oil-sands energy reserves in the Canadian province of Alberta, is known to be shareholder-friendly, and is expected to increase its dividend and buybacks, making it a good alternative to Saudi Aramco; 4) Personal finance stories report on how parents can help children who become YouTube stars and start making large amounts of money, and on how parents can begin teaching even very young children to manage finances; 5) Even parents who start early and dutifully contribute to their children’s 529 savings plans might find it hard to fund the full price of college, which can range from about $22,000 annually for public schools to more than $70,000 for prestigious universities; 6) About 10% of children under 18—about 7.2 million—have a severe disability, according to the Census Bureau, and their parents face a major challenge when it comes to financial planning, since traditional financial plans aren’t likely to offer coverage for special needs kids’ entire lives; 7) Retirees often experience a void with the loss of structure in their lives, feel useless or unwanted, or suffer feelings of isolation once they lose the social network that came with their job—but there are steps people can take to lay the groundwork for a fulfilling retirement.
* European Trader: Positive on LVMH: The French luxury giant has the scale and experience to make its $16.2B acquisition of TIF work—chief Bernard Arnault will likely position the company as a more exclusive brand, offering only a small amount of “entry-level bling.”
* Emerging Markets: If Ukraine doesn’t get a hoped-for $5B aid package from the International Monetary Fund, the country could struggle with debt repayment next year, and investors who have piled into one of 2019’s hottest bond trades may get badly burned.
* Commodities: “Growing populist unrest in Iran, a weakening U.S. dollar, and possible production cuts could prompt a rally in oil prices in the next few months.”
* Streetwise: BMY recently issued so-called contingent-value rights, an intriguing new security that offers an all-or-nothing bet that three drugs formerly in Celgene’s pipeline will be approved by the FDA within the next 16 months—and these CVRs look like a good bet, says columnist Andrew Bary.