Barron’s weekend summary: positive features on FDX, UPS, gold stocks
* Cover story: Article on the fee divide in mutual funds says that despite a shift among investors to lower-cost funds, $1.3T—more than 8% of the industry’s assets—remains in the two priciest quintiles of annual fees; Barron’s culled data from Morningstar Direct, Broadridge Financial Solutions, and BrightScope to find the most egregious examples of high fees, and discover what kind of investor is paying them.
* Features: 1) Positive on FDX, UPS: Rising postal rates might pinch AMZN, but would benefit the delivery companies, which are thriving because of e-commerce and could gain cover for more price increases; 2) A recent 6% rise in gold prices “has some investors wondering whether the market’s modest assumptions about gold and gold-mining stocks need to be reconsidered”; 3) Positive on Polyverse: Three-year-old cybersecurity startup claims it could have prevented last year’s WannCry virus from succeeding because its system keeps scrambling code, so that doors discovered by hackers close quickly; 4) Despite its naysayers, the Consumer Electronics Show can be an effective way to reach customers, developers, and investors, and breakout companies can gain funding, partnerships, and credibility.
* Tech Trader: Positive on INTC: The company has faced criticism for a recent revelation that its chips are vulnerable to hackers, but the real problem is “the nature of technology, and how the industry approaches computer security.”
* Trader: With the Dow hitting 25,000, it’s hard not to wonder if sentiment is getting a bit frothy—and easy to forget what a selloff could look like; For large banks, the big question about the new tax law is how much of the windfall will make its way to the bottom line and how much will be spent; DB analyst Carlo Santarelli says what matters for Macau casinos isn’t how fast GGR is growing, but the fact it is growing at all.
* Mutual Fund Quarterly: After red-hot growth among FAANG stocks, investors may want to consider reducing their exposure by rebalancing into funds less weighted in technology; Sue Thompson, an advisor to asset managers and strategists in the ETF business, brings years of experience at Vanguard, Barclays Global Investors, and BLK to her work; Of the 48 ETFs launched by insurance companies last year, USMC, GDVD, DMRL, CSML, DMRI grew the fastest; Christopher Lin, co-manager of FOCPX, talks about FAANG stocks; “Economic engines around the world fired in unison in 2017, with all 45 countries monitored by the OECD on track to show growth for the year.”
* Small Caps: A Barron’s analysis found that during each of the past five years, analyst recommendations for small-caps have had little to no power to predict returns over the following calendar year.
* European Trader: Cautious on Just Eat, Delivery Hero: European food-ordering companies have seen gains of more than 20% during the past six months, but shares at this point may be overpriced. Emerging Markets: Markets in Saudi Arabia and Russia struggled last year, but could be set to regain ground and offer investors gains this year.
* Commodities: “The price of regular unleaded gasoline this year will climb to its highest annual average since 2014, thanks in large part to crude-oil production cuts led by OPEC countries.”
* Streetwise: Tech companies are likely to ramp up their M&A efforts in 2018; AMZN continues to buy brands, while AAPL prefers to transform its businesses internally—but a change in that strategy could be the biggest story of the year.