TheChek News Flow

The 54-year-old ‘Friends’ actor was found unresponsive at his California home in October

Matthew Perry died from the acute effects of ketamine, according to an autopsy of the “Friends” actor released Friday.

The 54-year-old actor was discovered unresponsive in the pool at his Pacific Palisades home on Oct. 28, according to Los Angeles police officials.

“At the high levels of ketamine found in his postmortem blood specimens, the main lethal effects would be from both cardiovascular overstimulation and respiratory depression,” the Los Angeles County Department of Medical Examiner’s autopsy report said.

Drowning, coronary artery disease and “buprenorphine effects” also played a role in his accidental death, according to the autopsy. Buprenorphine is a medication used to treat opioid-use disorder.

Ketamine enhances the effects of opioids including buprenorphine, said Dr. Benjamin Yudkoff, medical director of the ketamine and esketamine program at Brigham and Women’s Faulkner Hospital in Boston. “There’s a greater risk of respiratory depression when you mix them,” he said.

Perry, who was open about his lifelong substance-abuse struggles, had been sober for 19 months, the autopsy report said. He was receiving ketamine infusion therapy for depression and anxiety, and his last known treatment was about a week and a half before he died, according to the report. Ketamine’s half-life, or the time it takes the amount of drug in the body to fall by 50%, is three to four hours, the report said.

Ketamine, an anesthetic, has been used in hospitals and clinics for decades to numb people during surgeries. It also has hallucinogenic properties and is used as a party drug, causing an out-of-body experience.

More recently, the drug has surged in popularity as a mental-health treatment, after some studies have shown that it can help patients with severe depression, post-traumatic stress disorder and chronic pain. Treatment clinics have popped up across the U.S., and some companies started prescribing it online during the Covid-19 pandemic.

The Food and Drug Administration hasn’t cleared ketamine as a mental-health treatment. But doctors can prescribe it for that purpose off-label because the drug is approved as an anesthetic. A similar chemical called esketamine is FDA approved for patients with treatment-resistant depression under the name Spravato.

The FDA published a warning letter in October about the potential risks of compounded ketamine products for the treatment of psychiatric disorders. Safety concerns include increases in blood pressure, slowed breathing and urinary tract or bladder problems.

Using ketamine without a health provider monitoring for sleepiness, dissociation or changes in heart rate can put patients at risk, the agency said in its letter.

“It really decreases your consciousness, and with that it can have cardiovascular changes and respiratory depression,” said Dr. Lisa Harding, a psychiatrist at the Yale School of Medicine who treats patients with ketamine. “This is a treatment that saves lives, but it has to be done with the right patient and it has to be done in the right place.”

Ketamine and other substances such as psilocybin and LSD have become popular among some tech executives and employees, who see psychedelics and similar substances as gateways to business breakthroughs.

On the day he died, Perry had played a game of pickleball, according to his assistant. The assistant later returned from running errands to find the actor floating face down in the pool, according to details included in the autopsy report. The assistant jumped in, moved the actor to a sitting position on the steps of the pool and called 911. Paramedics pulled him out and onto the grass and declared him unresponsive. The assistant didn’t note any “recent illnesses, complaints, drinking or drug abuse,” according to the report.

Perry’s death came as a shock to millions of his fans. The Massachusetts-born Canadian, with his seemingly easy humor, was a cultural touchstone for generations, along with his “Friends” co-stars. The show, which helped define the 1990s, continues to be in heavy rotation. Its stars remain familiar favorites to fans.

“He was such a part of our DNA,” Jennifer Aniston wrote in an Instagram post after Perry’s death. “We were always the 6 of us. This was a chosen family that forever changed the course of who we were and what our path was going to be.”

Perry continued to act with some success after “Friends” ended, but his struggles with drugs could be consuming. In his 2022 memoir “Friends, Lovers, and the Big Terrible Thing,” he detailed some of the cost of his addiction: 15 stays in rehab, an exploded colon, $7 million trying to get help, and living “half my life in one form or another of treatment center or sober living house.”

Perry eventually became a celebrity ambassador for the National Association of Drug Court Professionals and, for a time, operated a recovery facility out of his Malibu home.

“The best thing about me, bar none, is that if somebody comes to me and says, ‘I can’t stop drinking, can you help me?’ I can say ‘yes’ and follow up and do it,” Perry said in an interview while promoting his memoir last year. “When I die, I don’t want ‘Friends’ to be the first thing that’s mentioned. I want that to be the first thing that’s mentioned.”

California’s Civil Rights Department sued Call of Duty maker in 2021 alleging sexual harassment, discrimination and pay disparity

Activision Blizzard has agreed to pay more than $50 million to settle a high-profile lawsuit by a California regulator that helped spur Microsoft’s MSFT 1.31%increase; green up pointing triangle October takeover of the videogame company, according to people familiar with the matter.

The Civil Rights Department sued Activision in mid-2021, alleging its leadership ignored numerous employee complaints of sexual harassment, discrimination and pay disparity.

California’s Civil Rights Department said Friday the settlement resolves allegations that the company discriminated against women at the company, including by denying promotion opportunities and paying them less than men for doing substantially similar work.

A company representative didn’t immediately comment.

The agency comments came after The Wall Street Journal reported on the settlement.

Santa Monica, Calif.-based Activision has repeatedly denied the state’s charges and said an investigation into the matter by its board of directors concluded they were false. The company has since fired, pushed out or disciplined dozens of employees for misconduct and other issues, in response to an internal investigation.

If finalized, the settlement would be the second-largest by the state agency, behind a $100 million settlement with Riot Games, a smaller California videogame maker, over alleged gender discrimination. Riot apologized after the settlement was announced.

The agreement is subject to court approval. Activision agreed to take additional steps to help ensure fair pay and promotion practices at the company and provide monetary relief to women who worked at the company between 2015 and 2020, the California department said.

The agency had sought an amount much greater than the settlement Riot Games paid earlier this year to settle its lawsuit, according to people familiar with the negotiations. Details of the potential Activision settlement could still change.

The state in 2021 estimated Activision’s liability at nearly $1 billion to 2,500 employees who might have claims against the company, court documents show. Activision had around 13,000 employees as of the end of 2022.

California’s case against Activision stands out because it was part of a series of events that prompted Microsoft to swoop in with its $75 billion bid for the Call of Duty maker. After the suit was filed, federal agencies launched investigations into how the company handled employees’ allegations of sexual misconduct and workplace discrimination.

The Journal reported in the fall of 2021 that Activision CEO Bobby Kotick didn’t inform Activision’s board about some allegations of sexual misconduct within the company. Following the report, Activision’s stock dropped, some employees and investors called for Kotick’s ouster, and Microsoft saw an opening to make a deal. Kotick has said he was transparent with his board of directors.

In early 2022, Microsoft and Activision announced their merger agreement, valuing Activision at $68.7 billion after adjusting for its net cash. Kotick is expected to leave the company he has led for more than three decades at the end of this month.

California’s case against Activision has had challenges. In 2021, Activision agreed to pay $18 million to settle a lawsuit by the U.S. Equal Employment Opportunity Commission, which had been investigating it for allegations of sexual harassment and retaliation. California’s Civil Rights Department—then called California Department of Fair Employment and Housing before its name was changed in 2022—objected to the amount, saying it could ruin the agency’s lawsuit against Activision. A state judge ruled against the agency.

Also in 2021, Activision agreed to pay $35 million to settle claims by the Securities and Exchange Commission tied to its process for deciding whether its disclosures to investors should reflect any employee complaints about workplace misconduct. The federal agency further alleged that Activision violated a whistleblower-protection rule. Activision settled the probe without admitting or denying the SEC’s allegations.

Complicating the state’s case against Activision, California Gov. Gavin Newsom’s office in 2022 fired a lawyer involved in the suit, prompting a second attorney to quit in protest.

Since California filed its suit against Activision, the company has announced several initiatives aimed at making its workplace more inclusive. In 2022, the company’s Blizzard Entertainment unit hired its first vice president, head of culture.

Inflation raises costs in many European resorts, survey finds

Bardonecchia has been named the best-value skiing resort in Europe, knocking Bulgaria’s Borovets off the top spot for the first time since 2019.

The survey, carried out by Post Office Travel Money and Crystal Ski Holidays, compares the costs of lift passes, ski and boot hire, ski tuition and food and drinks over a one-week holiday.

Although inflation and increased living costs are squeezing families’ holiday budgets, tourist demand for trips and experiences remains high. According to the Post Office and Crystal Ski Holidays’ survey of 2,001 adults, 12 per cent are planning a ski holiday between December 2023 and April 2024.

Prices in the Italian ski resort for an adult rose just 1.4 per cent year on year to £532.

While still making the top 10, prices in Borovets rose 8.2 per cent to £554, while another Bulgarian resort, Bansko, saw prices rise by 18.1 per cent to £642, having been rated best value in 2018.

A French resort appeared in the top three of the best-value ranking for the first time. Le Corbier, in the Auvergne-Rhône-Alpes region, charges £611 for a week’s adult ski pass, equipment, tuition and food and drinks.

“Ski resort costs are likely to play an important part in destination choice this year as the rising cost of living in the UK puts pressure on the amount of money ski enthusiasts have available for their annual winter sports holiday,” Laura Plunkett, head of Post Office Travel Money, said.

Prices have fallen in nine of the 31 resorts surveyed last year and risen in 22. However, only two of those recorded increases are more than 10 per cent.

A new entry, Jahorina in Bosnia and Herzegovina, offers the best value for families of four at £1,657. Passo Tonale at £1,678 and Bardonecchia at £1,752, both in Italy, took second and third place.

Bansko lost its top spot for families due to a steep increase in ski school prices. Ski school for two adults and two children aged six and eight now costs £815, compared with £465 in Jahorina.

“Many parents taking their children skiing will want them to attend ski school and the cost of this can add considerably to a ski holiday,” said Plunkett.

Bag makers that can charge more today should also be able to charge more tomorrow — but some push against the limits

Luxury handbags are not just for Christmas. They can be something of an investment piece, too. Some hold much of their value in the second-hand market. A few even exceed it.

That is surely a worthwhile consideration for anyone browsing for that adorable basket bag on Bond Street. For those browsing a basket of luxury stocks instead, a bag’s performance on the secondary market offers useful insight into the pricing power of the company that sells it. That is another worthwhile consideration given slowing demand in the luxury sector.  

The bags that best hold their value tend to be those that were more expensive to start with, according to data from broker Bernstein, based on Rebag’s Clair report. That makes intuitive sense. After all, the price consumers are willing to pay for a smattering of finely stitched hide has very little to do with the cost of making it. It is solely a reflection of that brand’s desirability. 

In the broad scheme of things, bag makers that can charge more today should also be able to charge more tomorrow. Unsurprisingly, Hermès — whose primary sales are typically constrained by capacity — is off to the races in this situation. It looks a good bet both for consumers wishing to preserve the value of their arm candy and for investors wanting to benefit from a slowing 2024. 

Sometimes, however, successive price rises may leave a bag looking expensive relative to its desirability. One early way of spotting bags that may be pushing against the limits of their pricing power is to see whether the second-hand market is keeping up with the primary one.

Of course, resale prices are not the only data point investors in luxury stocks should use when looking at where to shelter in 2024. But the amount of bucks that customers are willing to shell out for a bag surely provides some indication.

The deals that show how lucrative private equity deals can be

3G’s acquisition of Burger King and the purchase of VMware have proved to be among the most profitable industry transactions

It’s been a rough year for private equity firms. The highest interest rates in more than a decade have combined with relatively high inflation and led to a disconnect between buyers and sellers. Without a meeting of those two minds, it’s tough to get deals done. The numbers bear that out.

According to S&P Global, in the first nine months of 2023 global private equity investments had an aggregate value of $365.3bn, a decline of 44 per cent year over year. The number of private equity deals fell 36 per cent to about 13,000.

In fact, a bit of a surprise, the biggest private equity deal of the year — the roughly $15bn buyout of Toshiba Corporation — is happening in Tokyo, not New York, and involves Japan Industrial Partners and not any of the typical American buyout stalwarts, such as Blackstone, KKR and Apollo. But the paucity of new deals in 2023 will no doubt be temporary. For why, just take a look at two of the most successful private equity deals of all time.

The scale of the profits on one of those came to light this year — the move to take Dell Technologies private and then subsequently buy and sell VMware, a cloud computing company, by Silver Lake Partners and billionaire Michael Dell. In November, Dell and Silver Lake completed the sale of VMware to Broadcom for $92bn, reaping part of an astounding windfall of $70bn for Dell, Silver Lake and their investors from the combined transactions, according to Financial Times calculations. 

I also have been following another remarkable deal, the Brazilian-American firm 3G’s 2010 buyout and transformation of Burger King into Restaurant Brands International, which has yielded 3G nearly $19bn on its initial $1.6bn equity investment.

Both deals needed a decade or more to gestate and both required a fair amount of risk and vision. But let’s focus on the 3G deal. In 2009, like countless other private-equity hopefuls scouting for deals, 3G partner Daniel Schwartz screened a bunch of undervalued companies. He came across Burger King.

At the time, the company was publicly traded after having been taken private by buyout firms TPG, Bain Capital and a division of Goldman Sachs, which together still owned 32 per cent of the stock. In 2010, led by 3G partners Schwartz and Alex Behring, 3G bought Burger King for $4.1bn, including debt. At the time, there was one brand — Burger King — with a network of 12,000 outlets across 70 countries. So-called system sales from all the outlets that used the brand were $15bn.

Since then, 3G has worked some kind of magic. Schwartz joined the company as its chief financial officer (and was named chief executive in 2013) and Behring became executive chair of the board. It’s rare for buyout partners to become executives of the companies they own. Cutting costs, 3G sold off the 1,300 company-owned restaurants to franchisees. It expanded overseas, into China, Brazil and France, among other countries.

In 2012, Bill Ackman convinced 3G to merge with Justice Holdings, a UK special purpose acquisition company, sponsored by the hedge fund manager, Martin Franklin and Nicolas Berggruen. That deal valued Burger King at $8.1bn including debt; 3G received another $1.8bn in cash from the Spac deal and earlier capital return while continuing to own 71 per cent of the company.

Then 3G went on an acquisition spree. In 2014 Burger King, soon to be renamed Restaurant Brands International, bought Canada’s beloved Tim Hortons for nearly $12bn, including $3bn of financing from Warren Buffett’s Berkshire Hathaway. In 2017, Restaurant Brands bought Popeye’s Louisiana Kitchen for $1.8bn in cash to get into the chicken sandwich game. And in 2021, Restaurant Brands paid $1bn in cash for Firehouse Subs.

In February 2023, the Restaurant Brands board selected insider Josh Kobza as its new chief executive to take charge of a company that now has more than 30,000 outlets in more than 100 countries that take in some $40bn in system sales.

After 13 years of ownership, 3G has realised $11.4bn so far and still owns 27 per cent of the company, worth $9.2bn. That represents nearly $19bn in gains, making the deal one of the most profitable ever for a single buyout firm. “There’s been a lot of value created,” Schwartz told me. “But we’re not going anywhere and I think there’s a whole lot more value to be created. I love the business.”

There’s no question private equity dealmaking will rebound, if for no other reason than the ungodly amount of money that can still be made if it is done right.

The car of the future has driven into a ditch.

With consumer uptake proving slower than expected, electric-vehicle sales growth has been falling, and the stocks have been plunging. On top of that, the industry pioneer, Tesla, just recalled virtually all of its vehicles sold in the U.S.

It’s enough to make investors give up on the companies that produce electric vehicles. But despite the turmoil, there are still opportunities. The key is to focus on auto makers with two attributes: affordable cars and profitable operations. In the early days of EVs, which is to say two or three years ago, things like that didn’t matter. Excitement alone drove the stocks to staggering heights. Now, practicalities count.

There’s no question the EV bubble has burst. The combined peak market capitalization, reached in 2020 and 2021, of Nikola, Fisker, Rivian Automotive, Lucid, NIO, XPeng, Polestar Automotive, Canoo, and Lordstown Motors was as high as $470 billion. Today, the nine companies’ market caps add up to just $68 billion—a drop of 86%.

So far, only three EV makers are consistently profitable: Tesla, BYD, and Li Auto. But even those stocks have taken it on the chin. Their peak market capitalizations totaled some $1.4 trillion. Today, that sum is down to about $910 billion. Tesla

TSLA’s market value has gone from about $1.2 trillion to about $790 billion.

Perhaps the biggest problem for the industry has been the high prices of the cars. The average electric vehicle costs some $52,000. While that is down from about $65,000 in November 2022, it’s about 20% higher than the average nonluxury car. Legions of consumers have balked at the prices.

The pricing problem will only get worse when EV models lose part, or all, of their $7,500 tax credit for buyers on Dec. 31, when new rules about the origin of batteries and battery materials go into effect. (The U.S., essentially, doesn’t want to subsidize EVs with Chinese batteries.)

Faraday Future Intelligent Electric is a case study in the perils of high-price EVs. The company makes ultraluxury, 1,000-plus horsepower cars priced around $300,000. Shares of the start-up peaked at a split-adjusted $1,660 in February 2021—and closed at 26 cents on Wednesday.

To the extent that EV prices have fallen, Tesla deserves most of the credit. It has cut prices repeatedly in 2023, partly to offset the pain of higher interest rates. In the third quarter, Tesla’s average selling price was about $44,000. Other battery-electric cars cost an average of about $64,000.

Tesla ran into a problem of its own this past week, recalling some two million of its vehicles for updates to their self-driving software systems. That, however, isn’t as ominous as it sounds: Millions of vehicles are recalled every year, and this recall is software-based and costs virtually nothing to correct. The required changes are only about driver warning signals—not the underlying technology—and aren’t technically an EV issue.

At this point, what EV makers need most is cheaper cars. What investors need are shares of auto makers that sell cheaper cars profitably. Two good bets are Chinese auto makers Li Auto and BYD.

Tesla has its attractions, too, but Li and BYD sport markedly lower valuations. Tesla trades for about 60 times estimated 2024 earnings; BYD for about 13 times. Both companies are expected to grow earnings at just under 30% a year on average for the coming three years. Li is trading for 20 times earnings. It is expected to grow earnings at 20% a year for the coming three years.

Before concluding that Li stock is overvalued, consider this: Its price-to-earnings-to-growth ratio, or PEG ratio, is one times. Tesla’s PEG ratio is about two times, as is the S&P 500’s. Li only recently got to the scale required to achieve profits. It’s shipping some 40,000 vehicles a month. It trades for about one times estimated 2024 sales. Lucid stock, by contrast, trades for about six times sales.

The average price for a BYD car was under $30,000 in the third quarter. For Li, it was about $45,000. That’s closer to something car buyers can get comfortable with.

Make no mistake: Traditional auto makers haven’t been spared from the EV pain. General Motors, Ford Motor, Stellantis, and Volkswagen have all leaned into the EV trend, announcing billions in spending on battery plants and new models. Their combined market capitalization has gone from a peak of about $425 billion to $235 billion, down 45%.

Investors looking for exposure to traditional car makers should focus on the same mix of profitability, affordability, and attractive valuation. GM stock is down 12% from the start of July, when labor issues started to weigh on investor sentiment. After a contentious strike, GM’s hourly workers got base wage increases of roughly 25% over the life of a new four-year-plus labor contract.

Investors have been worried that higher costs would crimp profitability, but GM Chief Financial Officer Paul Jacobson says his company has plans to offset all the labor cost increases in the coming year. Wall Street doesn’t buy it yet. Analysts project a 2024 operating profit margin of 6.6%, down from 7.4% expected for 2023.

If GM can manage to produce an operating profit margin of 7.4%, earnings per share should be closer to $8.25, leaving the stock trading for about four times 2024 earnings.

Beating low expectations is always a winning strategy on Wall Street, no matter what the sector.

GM is also launching a cheaper EV in the U.S. in 2024. The electric Chevy Equinox should start at around $35,000. That could be just the ticket.

Write to Al Root at allen.root@dowjones.com

Barron’s annual list of unloved stocks ranges from tech giant Alibaba to miner Barrick to auto rental stalwart Hertz Global.

The stock market is ending the year with a flourish—and so are Barron’s favorite picks for 2023.

Every December for the past 14 years, Barron’s has selected 10 stocks that are good bets to outperform the market over the next 12 months.

The 2023 group—which included Delta Air Lines and Comcast, among others—topped the market, returning 31% on average including reinvested dividends, against 24.5% for the S&P 500 . The 2022 group beat the index by 10 percentage points, while we were slightly behind the market in 2021.

To beat the market this year, you probably needed to have some exposure to the Magnificent Seven—Apple, Microsoft, Amazon.com, Alphabet , Tesla, Nvidia, and Meta Platforms. And we did. We included Amazon.com and Alphabet, which were trading cheaply a year ago, and they powered our list for 2023. But our picks, as is typical, had a value bias. The biggest winner was home builder Toll Brothers, which more than doubled, helping to offset our big loser, the aluminum miner Alcoa, which returned negative 29%.

Our list for 2024 includes a diversified mix of familiar stocks and some surprises, once again leaning toward, but not exclusively to, the value camp: Alibaba Group Holding , Alphabet, Barrick Gold, Berkshire Hathaway, BioNTech, Chevron , Hertz Global Holdings, Madison Square Garden Sports, PepsiCo, and U-Haul Holding.

Here are the stocks—and why we favor them—in alphabetical order:

Alibaba is one of the cheapest tech-oriented companies in the world—by a long shot.

After dropping 18% in 2023, Alibaba’s U.S.-listed shares trade for just eight times projected earnings in its current fiscal year ending in March. With that decline, the stock, at a recent $72, is back where it stood following its 2014 initial public offering, despite a tenfold rise in revenue and a fivefold increase in earnings. Its market cap is less than 15% of its closest American peer, Amazon.com.

The company sits on a small mountain of cash, equal to a third of its current market value of $184 billion. Adding in its core Chinese e-commerce unit, its cloud computing and logistics businesses, and a stake in Ant Financial, the sum of the company’s parts comes to about $130 a share, nearly double the current stock price, according to analysts at China Merchants Securities in Hong Kong

Alibaba isn’t risk-free. It delayed plans for an IPO of the cloud software business due to U.S. chip export restrictions, and faces growing competitive pressures in China. But headwinds from the Chinese government’s crackdown on big tech and a sluggish domestic economy are reflected in the stock, says Steve Galbraith, managing partner of Kindred Capital Advisors.

“At this price, things don’t need to go spectacularly well—or even well—for Alibaba,” he says. “They just need not to get incrementally worse.”

A bigger dividend, now 1%, or larger stock buyback could boost the stock.

Alphabet could be the best bet among the Magnificent Seven stocks that led the market higher in 2023.

It’s expected to grow as fast as Microsoft, with earnings forecast to be up 15% in 2024, three times as quickly as Apple’s 5% growth. Yet its stock trades for just 20 times earnings, a discount to both Microsoft and Apple’s 30 times, despite gaining 50% this year.

Investors have been worried about slowing growth in Alphabet’s cloud computing division, the threat that artificial intelligence poses to its search business, and antitrust scrutiny. Those issues look manageable.

The “disappointing” cloud business still grew third-quarter revenue at a 22% clip, and while the company was caught off guard by Microsoft’s AI search initiative, it quickly regrouped. As for antitrust issues, they may not go anywhere, and Alphabet might be worth more broken up, anyway.

Alphabet has over $100 billion of net cash as of Sept. 30, and the company is showing some discipline on costs. That leaves plenty of money to buy back stock, and perhaps even start paying a dividend. Alphabet could easily support a 1.5% payout, in line with the market.

“We continue to view Alphabet as one of the true leading tech franchises at a fundamental inflection point,” writes Evercore ISI analyst Mark Mahaney.

Gold-mining stocks haven’t been able to keep up with gold prices—but this may be the year that changes for Barrick Gold.

Gold miners are thought of as leveraged plays on the metal, yet Barrick shares are up just 3% this year while gold is up more than 10% to $2,036 an ounce. Blame higher costs and lower-than-expected gold production.

Barrick has several things going for it. The company has some of the world’s best mines in spots like Nevada and the Dominican Republic, and it’s the top gold producer in Africa. It aims to boost its mine output—mostly gold and some copper—by 30% by the end of the decade.

It has the industry’s most effective leader in CEO Mark Bristow, a swashbuckling South African and hands-on manager who visits each major mine at least three times a year. He also has a knack for handling delicate relations with host countries in the developing world.

“Barrick probably has the best management in the mining business, an excellent balance sheet with virtually no net debt, and a well-covered 2.3% dividend yield,” says independent analyst Keith Trauner. The stock trades for about 16 times next year’s projected earnings.

The recent death of Berkshire Vice Chairman Charlie Munger at 99 highlights the key-man risk at Berkshire, with the incomparable Warren Buffett now 93. Buffett is impossible to replace but he has positioned Berkshire to succeed without him, and the stock should do just fine with him still at the helm in 2024.

The case for Berkshire starts with what CEO Buffett calls a “Fort Knox” balance sheet, with over $150 billion in cash, or about 20% of the company’s market value. Earnings are growing too, with Berkshire’s after-tax operating profits up nearly 20% so far in 2023. They could hit $40 billion this year, powered by higher interest income on Berkshire’s cash and strong insurance underwriting results, helped by a turnaround at Geico. Berkshire’s equity portfolio, led by Apple, is having a great year.

The stock looks reasonably priced, valued at 1.4 times estimated year-end 2023 book value and about 18 times next year’s projected earnings. The Class B shares, at $356, trade at a 2% discount to the Class A stock and look like the better bet.

“Berkshire shares are attractive in an uncertain macro environment,” wrote UBS analyst Brian Meredith in a recent note. He puts intrinsic value at about $600,000 per Class A share and carries a price target of $620,000, versus a recent $545,000.

BioNTech, like all Covid-19 vaccine makers, has gotten crunched in 2023. But it has so much cash that it would have appealed to Warren Buffett’s mentor, famed value manager Benjamin Graham.

Covid vaccine plays, including BioNTech, its partner Pfizer, and competitor Moderna, have slumped amid growing doubts about demand for the jabs. Those concerns were confirmed this past week after Pfizer cut its guidance for Covid-related sales. BioNTech stock is now trading around $104, down from a peak of $447 in 2021.

The bear case is that profits from Covid vaccines, BioNTech’s only commercial product, will flag in 2024 and that the company’s drug pipeline is unexciting. Citing these factors, J.P. Morgan recently cut its rating on the stock to Underweight.

But unlike so many cash-burning biotechs, BioNTech is expected to remain profitable in 2024, and the company’s oncology-focused pipeline could prove more promising than some investors believe. BioNTech has also said it won’t blow the cash on an expensive deal.

And BioNTech has oodles of cash, more than $18 billion. That’s nearly three-quarters of its current market value of $25 billion. Investors effectively are paying just $7 billion for its Covid franchise and drug pipeline.

Graham would call that a margin of safety. We call that a stock worth owning.

Some of the sheen came off Chevron in 2023 but the company remains one of the best-run big energy companies in the world.

The stock, at around $150, is off 16.5% in 2023—worse than any of Chevron’s global supermajor peers, including Exxon Mobil, which is down 8%.

Chevron’s underperformance was deserved. Two of Chevron’s biggest oil fields in the Permian basin and in Kazakhstan had production shortfalls, and investors were unimpressed with Chevron’s $60 billion deal to buy Hess, a steep price for a company whose chief asset is a 30% stake in the huge offshore field in Guyana.

Still, the shares look inexpensive, despite the possibility that 2024 earnings estimates come up short of expectations due to recent weakness in oil and gas prices. Chevron trades at 10.7 times projected 2024 earnings and yields 4.2%, based on the company’s plan to boost its dividend by 8% in January. After the Hess deal closes, the company also plans to buy back $20 billion of stock annually, or about 6% of its shares.

Greg Buckley, an analyst at Adams Funds, says Chevron has a lower-risk growth profile than peers, trades at a 15% discount to its average cash-flow multiple, and should have a total yield—dividends plus buybacks—of about 12% after the Hess deal closes. “The valuation is compelling,” he says.

Hertz’s high-profile move into electric vehicles has proven a bust, but the stock looks cheap enough to be a winner in 2024.

Barron’s had a favorable call on Hertz when the stock traded close to $18 earlier this year, but shares have dropped almost 50%, to around $10. To put it simply, Hertz’s big bet on EVs—about 11% of its fleet against an estimated 2% for rival Avis Budget Group—went bad. Repair costs for its Tesla-heavy fleet are high, and Hertz is getting less than it had projected when the cars are sold due to deep price cuts. Customers aren’t keen on the cars either, due to charging and range issues.

The rental-car industry, though, is an oligopoly, with over 90% of the U.S. market controlled by Enterprise, Avis, and Hertz. That means pricing should stay rational. And even with cuts in profit estimates, Hertz trades cheaply at 8.6 projected 2024 earnings, while its market value of $3.1 billion is less than half that of the somewhat larger Avis. There’s also a chance that the investor group that controls Hertz with a nearly 60% stake could offer to buy out public shareholders if the stock remains cheap.

The current stock price is “overwhelmingly attractive for patient investors,” wrote Chris Woronka, a Deutsche Bank analyst.

MSG Sports owns two of the most valuable professional teams in their sports: the New York Knicks and Rangers.

According to Sportico estimates, the Knicks and Rangers are worth $7.4 billion and $2.45 billion, respectively. But the company’s current market value of just $4.2 billion, plus some $300 million of net debt, is worth less than half that. The stock, now around $173, is below where it stood five years ago.

That’s too cheap, even factoring in the “Dolan discount,” a reference to the controlling Dolan family. Chairman Jim Dolan told Barron’s in September that the company won’t entertain a full sale of either team and isn’t interested in a partial sale, either.

“The market is assigning a pretty punitive ‘Dolan discount’ to these trophy assets,” says Jonathan Boyar, president of Boyar Research.

He values the stock at more than $300 a share. He says the company should sell a minority stake in the Knicks or Rangers, buy back a lot of stock, or pay a regular dividend. The ultimate payoff would be a sale of the entire company—and there probably isn’t much downside, given the discount to asset value.

Boyar notes that the Dallas Mavericks’ Mark Cuban, who was thought to be an owner for life, recently sold a majority stake in the team to the Adelson family.

MSGS stock is languishing because investors are tired of waiting for the Dolans to do something. The wait could end in 2024.

The “Ozempic effect” and flagging investor interest in traditional consumer staples have weighed on PepsiCo stock this year. But the impact of weight-loss drugs on PepsiCo’s snack-food and beverage franchise will likely be minimal.

Though named for a soft drink, Pepsi has a best-in-class snack-food franchise in Frito-Lay, maker of Doritos, Cheetos, and Lay’s potato chips. Frito-Lay generates more than half the company’s profits, making Pepsi less dependent on sugary soda than Coca-Cola.

Fears that weight-loss drugs will curb snacking caused PepsiCo stock, at $168, to drop 7% in 2023. A confident Pepsi, though, said in October that it expects to deliver per-share earnings growth at the top of its high-single digit annual target in 2024 after a projected 13% gain this year. And the stock trades for 20.6 times next year’s projected earnings, below its five-year average. It also yields 3% and has raised its dividend for 51 straight years, including a 10% increase this past summer.

As for Ozempic, its use is far from widespread—maybe 1% of the population in 2024.

“Pepsi is the most durable business in our coverage,” wrote Jefferies analyst Kaumil Gajrawala in a recent client note.

It rarely pays to bet against the American eater.

There are few businesses with a stronger competitive position than U-Haul Holding, which dominates the do-it-yourself moving business with its nationwide fleet of trucks.

U-Haul’s rivals—including Penske and Budget—are a fraction of its size. It’s the ultimate network-effect business, given its 23,000 locations around the U.S. and Canada and nearly 200,000 rental trucks. The $12-billion company has steadily built a sizable self-storage business that now ranks third in the industry, and could be worth $8 billion alone based on comparable companies.

Given U-Haul’s market position, the nonvoting stock, which trades under the ticker UHAL.B, looks inexpensive. Even with earnings expected to slip to $4.50 this fiscal year due to reduced moving activity, shares are valued at about 14.1 times earnings at a recent $63, while the long-term outlook looks strong.

There is virtually no Wall Street coverage of U-Haul. It is run like a private company by the Shoen family, which owns about half the company.

“It’s hard to find such a dominant brand and such an extremely well and conservatively run business as U-Haul,” says Kindred Capital’s Galbraith. He says the company would be a great acquisition for Berkshire Hathaway.