Barron’s Weekend Summary: As the ESG approach soared in popularity, investment companies large and small seized the opportunity to design and market new related funds and rankings
Cover Story:
As the ESG approach soared in popularity, investment companies large and small seized the opportunity to design and market new related funds and rankings. Professionally managed assets with ESG mandates swelled to $46T globally in 2021, representing nearly 40% of all assets under management, according to Deloitte’s Center for Financial Services. By 2024, that figure is forecast to rise to $80T, or more than half of all professionally managed assets.
Interview:
Barron’s has interviewed market strategist Jason De Sena Trennert. He relies on quantitative analysis and ‘shoe-leather reporting.’ “I spend a lot of time just talking to people,” says the chairman of Strategas, an investment-strategy, economic, and policy-research firm. “I talk to taxi drivers, bartenders, coat-check clerks, local businessmen—anyone—to figure out what’s happening. It’s an extremely important part of the way we do our research.” Trennert says. “If you’re a news junkie, following the financial markets is one of the more intellectually stimulating jobs you can have because everything, especially on the macro side, becomes important. Everything that you see on the nightly news has an investment implication.”
Tech Trader:
This week, Barron’s interviews Mary Meeker, who had an astonishingly productive career as an internet ‘seer’, when she was a tech analyst at Morgan Stanley in the 1990s. She became the sector’s most influential analyst, championing Amazon.com , Microsoft, Apple, and Dell. In 2010, Meeker gave up that gig to become a venture investor with Kleiner Perkins. She picked winner after winner, investing in companies like Airbnb , Uber Technologies, and Snap. Meeker and her team left Kleiner in 2018 to set up a new firm, Bond Capital.
The Trader:
-The New York International Auto Show is under way, its first in-person meetup since 2019. But before enthusiasts started checking out new models, Wall Street hosted a conference with automotive companies. Despite considerable headwinds, “none of the companies at the conference cut their financial guidance. That was a surprise, says Bank of America Securities analyst John Murphy, whose firm hosted the event. He doesn’t believe the 2022 outlooks are safe. “The tone of the conference was relatively cautious on the near-term, given continued volatility, but more constructive on the medium-to long-term outlooks,” he wrote.
-This could be the year to follow the adage: “Sell in May and go away,” suggests Barron’s. It was a pretty lousy holiday-shortened week. The S&P 500 dropped 2.1%. The Nasdaq Composite fell 2.6%. The Dow Jones Industrial Average was the relative winner, slipping just 0.8%. The reasons are that war, inflation, disease, and the Federal Reserve’s newfound determination to put the brakes on rising prices are all increasing uncertainty and hurting investor sentiment. It’s a lot to digest. “Maybe it’s best just to give up—for a while.”
Features:
Even for a company that has frustrated repeated efforts to wring big profits from its monopoly on real-time news, Elon Musk’s takeover bid falls short of offering a neat solution to Twitter’s woes. Indeed, the stock gained 15% from where it traded before Musk disclosed his 9.1% position on Thursday, closing at $45.08, in apparent disbelief that Twitter will get bought by Musk or anyone else. Yet, on Friday, the company announced it had adopted a “poison pill” to thwart a hostile takeover.
-Tesla investors are nervous about Elon Musk’s Twitter takeover bid. “It’s not easy riding with Elon Musk on one of his adventures. Tesla stock has been jumpy since he took his Twitter stake. On Thursday, after he made his takeover bid, Tesla shares fell 3.7%, shedding $38.6B in market value. Shareholders are nervous. Many investors see the unpredictable Musk as irreplaceable—the so-called key-man risk. “Tesla is Elon Musk,” says Roth Capital analyst Craig Irwin, likening him to Apple’s Steve Jobs. “He’ll be the most important person at Tesla for the next 20 years.”
European Trader:
Dutch-Swiss chip maker STMicroelectronics, along with many of its peers, has seen business boom on the back of rising global demand and supply constraints.
That, in turn, led the Tesla and Apple supplier—which designs, develops, and makes semiconductors—to post fourth-quarter revenue ahead of guidance in January. And it has driven up the Paris-listed stock about 6% in the past 12 months to EUR34.75 ($37.84).
Emerging Markets:
In Pakistan, “political instability is increasing as economic challenges rise,” says Arif Rafiq, president of political-risk adviser Vizier Consulting. “Optimism is not a word I would use for Pakistan right now.” But bright side is that stocks are cheap, down by three-quarters from a peak in 2017. “Pakistani companies are trading at ridiculous valuations,” says Faisal Ghori, director of research at frontier and emerging markets specialist Consilium Investment Management. It will still take a strong stomach to bet on a rebound.
Commodities:
Fund managers’ portfolios are the most weighted toward commodities since at least 2006, the starting point of a series of surveys conducted by Bank of America. The latest results, disclosed this week, show a net 38% of investors surveyed are overweight commodities. The second-highest was a tick above 30% earlier this year. The Invesco DB Commodity Index Tracking Fund has risen about 35% this year. Now at just over $28 a share, the fund is trading at about 29% above its 200-day moving average. That means it is far above its long-term trend, suggesting its price must soon come back down to earth.
Streetwise:
Jack Hough has “an urgent message for Elon Musk: When the number 58,008 is turned upside down on a calculator, the 8s looks like Bs and the 5 a bit like an S, yielding an informal anatomy term that gets a laugh from young schoolboys every time. Rhymes with ‘tubes.’ It’s a potential game-changer for the attempted Twitter takeover.”