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The Alibaba chief paid for pushing back against Beijing. But the shift in attitude also speaks to a growing wealth gap and diminished opportunities for the young.

In China, Jack Ma is synonymous with success. The English teacher turned internet entrepreneur is the country’s richest person. He founded Alibaba, the closest thing Amazon has to a peer and rival. After Donald J. Trump was elected president in 2016, Mr. Ma was the first high-profile Chinese person he met with.

That success has translated to a rock-star life for “Daddy Ma,” as some people online called him. He played an unconquerable kung fu master in a 2017 short film packed with top Chinese movie stars. He has sung with Faye Wong, the Chinese pop diva. A painting he created with Zeng Fanzhi, China’s top artist, sold at a Sotheby’s auction for $5.4 million. For China’s young and ambitious, Daddy Ma’s story was one to emulate.

But lately, public sentiment has soured and Daddy Ma has become the man people in China love to hate. He has been called a “villain,” an “evil capitalist” and a “bloodsucking ghost.” A writer listed Mr. Ma’s “10 deadly sins.” Instead of Daddy, some people have started to call him “son” or “grandson.” In stories about him, a growing number of people leave comments quoting Marx: “Workers of the world, unite!”

This loss of stature has come as Mr. Ma is facing increasing trouble with the Chinese government. Chinese officials on Thursday said they had opened an antitrust investigation into Alibaba, the powerhouse e-commerce company that he co-founded and over which he still holds considerable sway.

At the same time, government officials are continuing to circle Ant Group, the fintech giant that Mr. Ma had spun out of Alibaba.

Last month the authorities quashed Ant’s planned blockbuster initial public offering, less than two weeks after Mr. Ma publicly castigated financial regulators for being obsessed with minimizing risk and accused China’s banks of behaving like “pawnshops” by lending only to those who could put up collateral. On Thursday, on the same morning that the Alibaba antitrust investigation was announced, four regulatory agencies said that officials would meet with Ant to discuss new supervision measures.

On its surface, the shift in Mr. Ma’s public image stems in large part from the Chinese government’s growing criticism of his business empire. A look beneath the surface shows a deeper and more troubling trend for both the Chinese government and the entrepreneurs who powered the country out of its economic dark ages over the past four decades.

A growing number of people in China seem to feel the opportunities that people like Mr. Ma enjoyed are disappearing, even amid China’s post-coronavirus surge. While China has more billionaires than the United States and India combined, about 600 million of its people earn $150 a month or less. While consumption in the first 11 months of this year fell about 5 percent nationally, China’s luxury consumption is expected to grow nearly 50 percent this year compared with 2019.

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Young college graduates, even those with degrees from the United States, face limited white-collar job prospects and low wages. Housing in the best cities has become too expensive for first-time buyers. Young people who have borrowed from a new generation of online lenders, like Mr. Ma’s Ant Group, have debts they increasingly resent.

For all of China’s economic success, a long-running resentment of the rich, sometimes called the wealthy-hating complex, has long bubbled below the surface. With Mr. Ma, it has emerged with a vengeance.

“An outstanding people’s billionaire like Jack Ma will definitely be hanged on top of the lamppost,” an online commentator wrote in a widely circulated social media post, referring to the famous lynching slogan in the French Revolution, “À la lanterne!” The article was liked 122,000 times on the Twitter-like Weibo platform and read more than 100,000 times on the messaging and social media app WeChat.

The Communist Party seems more than willing to tap into that resentment. This could mean trouble ahead for entrepreneurs and private businesses under Xi Jinping, China’s top leader, who values servility and loyalty above everything else.

In an annual leadership meeting last week that set the tone for the country’s economic policies for the coming year, the party vowed to strengthen antitrust measures and prevent “the disorderly expansion of capital.”

Some businesspeople say that the hostility toward Ant and Mr. Ma makes them wonder about the fundamental direction of the country.

“You can either have absolute control or you can have a dynamic, innovative economy,” said Fred Hu, founder of the investment firm Primavera Capital Group in Hong Kong. “But it’s doubtful you can have both.” His firm is an investor in Ant Group, and he sits on Ant’s board.

Mr. Xi made no secret about what his ideal capitalist should be like. Ten days after the Ant I.P.O. debacle, he toured a museum exhibition devoted to Zhang Jian, an industrialist who was active more than a century ago. Zhang helped build up his hometown, Nantong, and opened hundreds of schools. Business figures in the Xi era, the message went, should also put their nation ahead of business.

In a July meeting with the members of the business community, Mr. Xi pointed to Zhang as a role model and urged them to rank patriotism as their top quality. (Mr. Xi reportedly didn’t mention that Zhang died bankrupt.)

Mr. Ma has his own high-profile philanthropic projects, like several initiatives in rural education and a prize to help develop entrepreneurial talent in Africa. But in many other respects, the flamboyant technology entrepreneur differs greatly from Zhang.

He has long enjoyed a better reputation than his peers in manufacturing, real estate and other industries whose edge may derive from cultivating close government ties, ignoring the environmental rules or exploiting employees.

He is as famous for making bold statements and challenging the authorities. In 2003, he created Alipay, which later became part of Ant Group, putting his business empire square in the center of the state-controlled world of finance.

“If someone needs to go to jail for Alipay, let it be me,” he told his colleagues at the time.

He sometimes subtly dared the government to punish his defiance. Regarding Ant’s business, he said on multiple occasions, “If the government needs it, I can give it to the government.” His top lieutenants repeated the line, too.

At the time, few people took these remarks seriously. People who know him well considered them a very “Jack thing” to say. “Giving Alipay to the country? Jack Ma is just saying,” read the headline of a 2010 opinion piece in the China Business News newspaper.

Now the chances that those bold statements become real have heightened. “Given what has happened, eventually Ant will have to be controlled or even majority owned by the state,” said Zhiwu Chen, an economist at the University of Hong Kong’s business school.

The pressure on Mr. Ma signals a shift in how the Chinese government regulates the internet. It has long censored content, but in other ways it has adopted a laissez-faire approach. Regulations were spare. No state-run companies were involved. And at the beginning, China’s internet industry was small.

Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States. And just like their American counterparts, the Chinese giants sometimes bully smaller competitors and kill innovation. You don’t have to be a member of the Communist Party to see reasons to rein them in.

Instead of disrupting the state system, the companies have cozied up to it. Sometimes they even help the authorities track people. Still, the government has increasingly seen their size and influence as a threat.

China’s tech companies are not the country’s biggest monopolies, however. Those are owned by the state, which dominates banking and finance, telecommunications, electricity and other essential businesses.

“China Mobile is a monopoly. Industrial and Commercial Bank of China is a monopoly,” wrote Zhang Weiying, a well-regarded Peking University economist, in 2017, “because without the government permission, you can’t enter these industries.”

The article was reposted under several social media accounts last week but was quickly censored.

It’s too early to tell how far the regulators will go in reining in Mr. Ma and big tech. But some pro-market people in China worry that the country is drifting toward the hard line of the 1950s, when the party eliminated the capital class, using language that compared capitalist leanings to impurities, flaws and weaknesses.

To these people, some of the language recently used by Eric Jing, Ant’s chairman, evoked the era. At a conference on Dec. 15, he said the company was “looking into the mirror, finding out our shortcomings and conducting a bodily checkup.”

A New Airbus Plane? What It Would Mean for Boeing, Raytheon and GE.

Raytheon Technologies (ticker: RTX), GE (GE), Safran (SAF, France), and Rolls-Royce (RR.London) make jet engines, while Airbus (AIR.France) and Boeing assemble the planes. A new plane or engine would be a big deal for those companies, but the details are so scant that the news isn’t moving stocks all that much, especially given that it is Christmas Eve.

The Bloomberg article cited a Wednesday appeals-court decision, which it said has since been sealed, dealing with an intellectual-property dispute between Boeing and a unit of Raytheon Technologies (RTX).

Boeing stock was down about 1% in early afternoon, while Raytheon (RTX) and GE (GE) shares were off 0.7% and 1.5%, respectively. Airbus and Rolls-Royce shares closed close to flat, while Safran stock dropped about 0.4%

The S&P 500 and Dow Jones Industrial Average were both little changed.

An all-new plane would, frankly, be a bit of a surprise coming out of the pandemic. Boeing has talked about plans for what it has called a new medium-size aircraft, or NMA, since 2017, but no decision about development has been announced. Even the size of that plane isn’t set in stone. Originally, industry executives expected it to be a twin-aisle jet, but others have said more recently that it might be a single-aisle plane.

Boeing, Airbus, and GE didn’t immediately respond to requests for comment.

The industry might not need a new plane, from Boeing or Airbus. Travel is down and planes, with modern engine technology are more capable than in the recent past.

“There are six planes that matter,” Credit Suisse analyst Robert Spingarn tells Barron’s. Those are the Airbus A220, A320 and A350 as well as the Boeing 737 MAX, 787 and 777X. “Those are the planes that matter that will last into the future,” he said.

Even if a new plane isn’t on the drawing board, new engines could be.

“Airbus has already publicly said that it is developing low/no carbon aircraft for the next decade,” wrote Vertical Research Partners analyst Rob Stallard in a Thursday research note. “What is more intriguing is that GE is reported to have offered a geared turbofan engine.”

A geared turbo fan is a jet engine with, well, gears—like a car or bicycle. Gears add complexity, which can increase maintenance costs, but they can make an engine more efficient than the traditional turbofan engines in widespread use today.

A Raytheon geared turbofan engine, made by subsidiary Pratt & Whitney, powers the Airbus A220 and A320 NEO jets. The A320 NEO can also be bought with a LEAP-1A engine from CFM, the engine joint venture between GE and Safran (SAF.France).

A new geared turbofan is potentially more competition for Raytheon, but investors don’t need to fret. Market shares in aerospace change very slowly. Planes take years to design and fly for decades.

Rolls-Royce, for its part, is a large maker of jet engines, but its equipment typically powers larger planes. Some of its products power 777, 787 and A350 jets.

Engines are fascinating, but the biggest issue for the commercial aerospace industry isn’t about the next hot jet or futuristic engine technology. The issue is when will commercial air travel look like it did in a pre-pandemic world. U.S. air traffic is still down roughly 60% compared with pre-Covid levels. The air travel recovery is, and will remain, the biggest issue for the industry and aerospace investors in 2021 and beyond.

What Apple Would Want From the Auto Market. It’s Not About Making Cars.

The iCar chatter started with a Reuters report, and investors responded by bidding up the market cap of Apple (ticker: AAPL) by about $145 billion from Monday’s low to Tuesday’s close. That’s more than the market values of Ford Motor (F), General Motors (GM), and Fiat Chrysler (FCAU) combined. Imagine if Apple had actually announced something.

Stories about Apple’s ambitions in the automobile market have swirled for at least a decade. “Steve Jobs, if he’d lived, was going to design an iCar,” Mickey Drexler, a former Apple board member, said in a 2014 interview at the Parsons School of Design in New York. Over the years, there have been reports that Apple has hired hundreds of engineers for what is supposedly known as Project Titan. The Reuters report says that Apple has new battery technology that will provide longer range and lower costs than existing batteries used by Tesla (TSLA) and others. Apple isn’t saying anything—it never talks about unannounced products—but I doubt that we will see iCar dealerships anytime soon.

To be clear, the appeal of this idea is obvious. Apple’s sales are enormous—Wall Street expects $330 billion in the September 2022 fiscal year. To drive meaningful growth, it must aim at large markets. And as my colleague Al Root has calculated, the world’s 26 largest auto makers last year had sales of more than $2 trillion combined.

But I find the notion of Apple becoming a full-fledged car company far-fetched. Sure, Apple has long been nibbling around the edges of the auto market with its CarPlay service for in-cabin entertainment and maps. Yet Apple’s expertise is in design, engineering, logistics, and marketing. It doesn’t manufacture anything, relying on contractors to make phones, Macs, and other wares. As Citigroup analyst Jim Suva notes, making cars would compress Apple’s margins, making it an unlikely strategy.

At the same time, Apple is not just going to ignore a $2 trillion market. Morgan Stanley auto analyst Adam Jonas wrote last week that he and his tech analyst colleagues have long thought that Apple would one day design and engineer a car.

“It’s not that we believe Apple wants to get into the auto industry as conceived by today’s auto companies, but that Apple may have an interest in enhancing the driving experience with vertical integration of hardware, software, and services,” he said in a research note.

Jonas thinks that the value of services in the “internet of cars”—multiply monthly active users (drivers) by average revenue per driver—could dwarf sales from simply selling cars. “The world’s 1.2 billion light vehicles travel in excess of 10 trillion miles per year, and humanity spends over 600 billion hours of time inside automobiles annually...the equivalent of 68 million years,” he said.

Now, imagine those were autonomous cars. That would free up a lot of consumer time to watch Apple TV+, listen to Apple Music, read Apple News, and play in Apple Arcade on iPhones, iPads, or MacBooks.

Tesla CEO Elon Musk entered the iCar discussion on Tuesday. In a tweet, he said that during a difficult moment for his company, he reached out to Apple CEO Tim Cook to discuss selling Tesla to Apple for a 10th of the recent price (let’s call it $60 billion). Cook “refused to take the meeting,” Musk wrote.

Whether an Apple/Tesla combination would have worked, we’ll never know.

Let’s get small: The huge 2002 tech rally has stripped the landscape clean of obvious bargains. (Though I think I found one in Yelp [YELP]; see “Yelp Stock Deserves a Positive Review. Expect a Reopening Rebound.”.) In search of cheap merchandise, I chatted recently with Jeffrey Meyers, proprietor of Cobia Capital, a New York–based hedge fund. His preference is for unloved and unknown tech companies with market caps under $3 billion that trade at modest multiples. Here are two examples.

Meyers is keen on AirGain (AIRG), which makes antennae for fixed and mobile wireless applications. He’s especially jazzed about the prospects for a new AirGain antenna for first-responder vehicles that allows them greater range so radio signals can penetrate farther into buildings. AirGain is up about 40% this year, but he sees higher highs. Now trading for about $15, it could be a $75 stock a few years from now, he thinks.

He is also enthusiastic about Nordic Semiconductor (NOD.Norway), a Norwegian company that makes Bluetooth chips for things other than smartphones: headsets, keyboards, mice, and other applications. Meyers notes that the chips are found, for instance, in Tile tracking devices, which can be attached to almost anything that you wouldn’t want to lose—your dog, say, or your keys. Apple is rumored to be working on a similar product, which he thinks also could include Nordic’s chips.

Nordic shares aren’t as cheap as those of other Meyers picks, but the company is seeing accelerating growth—revenue was up 45%, year over year, in the September quarter and 34% sequentially—in a growing niche. Nordic, meanwhile, is gaining some early traction in chips used in cellular-based Internet of Things applications.

Wall Street is looking for…well, there aren’t any U.S. analysts. Just the kind of stock Meyers loves. Nordic could be acquisition bait for many potential buyers, he says, as the chip sector continues to consolidate.

Corporate travel has fallen off a cliff during the pandemic, taking airline traffic with it. The Las Vegas Strip, ordinarily bustling with conference-goers and leisure travelers alike, more resembles a quiet resort town than the 24/7 hive of activity it usually is. No cruise ships—aside from some Covid-stricken stragglers—have embarked from or entered U.S. ports since mid-March.

Even domestic leisure travel, a relatively bright spot over the summer and into the fall, is coming up against a surge of Covid-19 cases and a fresh round of travel and commercial restrictions around the country. Pennsylvania, for instance, recently closed its casinos for the second time this year to combat the spread of the coronavirus. Nearly 70% of Americans said they wouldn’t travel for Christmas, according to a recent survey commissioned by the American Hotel & Lodging Association.

It’s not exactly a picture postcard for travel and tourism these days.

And yet, travel and leisure stocks—including cruise, lodging, casino, and time-share names—have been on a tear. Some are up 20% or more in recent weeks, though many remain down on the year. A big impetus came in early November when promising news about the efficacy of Covid-19 vaccines began to emerge, and the good feelings continued with the approval and rollout of vaccines.

“It’s a belief that travel will come back,” Geoffrey Ballotti, CEO of Wyndham Hotels & Resorts (ticker: WH), tells Barron’s. “It’s a belief that people want to get out of the house. They want to travel. They want to see things come back to normal.”

Still, while the vaccines should pave the way for better times and earnings across the travel and tourism industry, the speed and takeup of the rollout are wild cards. Many Americans have seen their incomes and travel budgets take a hit, and there is also sure to be some lingering skittishness among people and businesses. Investors, then, need to have a framework.

“From a high level, the way we have gone about this, No. 1, is thinking about leisure versus business, No. 2, driving versus air travel and, No. 3, outdoors versus indoors,” says David Katz, a leisure and gaming analyst at Jefferies.

Katz expects leisure and business travelers will unleash a lot of pent-up demand, starting in the middle of 2021 and extending into early 2022. They “will be looking to get out and travel and get caught up,” he says.

“People are feeling safer, especially to get in their car and drive someplace. They feel they can do it safely and responsibly. ”

— Wyndham Hotels CEO Geoffrey Ballotti

With that in mind, investors shouldn’t fret that they’ve missed the boat. For one thing, there are sure to be pullbacks after the rally as pandemic news ebbs and flows. What’s more, some sectors will rebound more quickly than others and there could be bargains among the laggards.

“It’s about picking my names carefully—the ones I have confidence in that there’s not any lingering problems or some sort of impairment to the business model,” says Patrick Scholes, who covers cruises and lodging for Truist Securities.

He points to time-share companies, such as Wyndham Destinations (WYND), Hilton Grand Vacations (HGV), and Marriott Vacations Worldwide (VAC), as compelling picks because they’ll benefit from a strong demand for domestic leisure travel and a steady stream of fee income, among other things. Marriott’s shares are up about 3% this year, but the others are still underwater.

They all trade at less than 10 times enterprise value (mainly market capitalization, plus net debt) to consensus estimates for 2022 earnings before interest, taxes, depreciation, and amortization, or Ebitda. That compares with more than 16 times for traditional lodging companies like Marriott International (MAR) and Hilton Worldwide Holdings (HLT).

As for the surge in travel and leisure stocks, Scholes says: “It’s purely vaccine trade momentum here, because it’s not like hotel bookings and room rates are seeing any green shoots.” During the week ended Dec. 12, for example, revenue per available room, a key hotel industry metric known as revpar, was down 57% year over year.

Nevertheless, the backdrop for the hotel industry coming out of the pandemic, assuming the vaccines are successful and widely disseminated, is promising, says Bill Crow, head of real estate research at Raymond James. That’s partly because “we do expect hotel supply growth to slow over the next few years,” he tells Barron’s.

“That sets the stage for what should be a multiyear, fundamental upturn for the group right through 2024-25, assuming we don’t screw up the economy,” he adds.

Another potential catalyst that looks more within reach now is the return of business travel, on which many companies, including Marriott International and Hilton Worldwide, depend heavily. While Zoom meetings and other virtual tools have helped businesses get through the pandemic, there’s no substitute for making connections face to face during a conference’s coffee break or over a drink in the hotel bar.

Steve Reynolds, CEO of Tripbam Analytics, which helps companies monitor and book their travel, expects to “see a nice increase” in next year’s second-quarter business travel to about 40% of 2019 levels. He’s expecting the figure to hit 60% by the end of 2021—with international travel starting to pick up by then—and 80% in 2022.

“Everyone’s just itchy to get back to a conference or to a trade show,” Reynolds says. “They had value before. It’s all about networking in the hallway and bumping into people.”

Mark Finn, portfolio manager of the T. Rowe Price Value fund (TRVLX), spotted a few opportunities in April and May when he was aggressively buying shares of Hilton Worldwide and Marriott International. “As awful as the world seemed then, that was not really that hard to do,” he recalls.

More than a half-year later, Finn still holds Hilton and Marriott along with a smaller position in MGM Resorts International (MGM), which is more of a play on the beleaguered Las Vegas Strip. “They are good holdings, but they are not the fat pitches they were,” he says.

Meanwhile, the major U.S. cruise operators have been largely shut down since mid-March and have extended sailing suspensions into February or March as they look to address the conditional sailing order they received in October from the Centers for Disease Control and Prevention. “Right now, every one of my clients is sitting on hold,” says Jackie Ceren, who runs a travel agency in Largo, Fla., with an emphasis on cruises.

The companies say they are cautiously encouraged by booking trends, but they’re burning through hundreds of millions of dollars every month, and they aren’t expected to earn a profit until at least 2022—and a modest one, at that.

But stocks of the cruise operators, though still down at least 40% year to date, have surged on the vaccine news. “People have the ability and willingness and desire to go on a cruise post-Covid,” says Chris Woronka, a cruise and lodging analyst at Deutsche Bank. “That’s bullish. I just think the stocks have priced all of that optimism.”

Woronka, who remains bullish long term, thinks that expectations about the post-Covid reopening need to be tempered a bit. “It’s going to be a little more gradual of a recovery than we might think,” he says. “I have no idea when cruise lines or airlines or hotels are going to say you don’t have to wear a mask anywhere, but it’s not going to be when the first person gets the vaccine or the first 10% get vaccinated.”

An example of the valuation euphoria: Royal Caribbean Group (RCL) recently fetched more than 18 times its enterprise value to projected 2022 Ebitda, based on Woronka’s estimates. Its 10-year average for that metric is about nine times, he says.

Stepping back, Thomas Allen, a lodging, gaming, and cruise analyst at Morgan Stanley, says that Covid has created “some structural shifts in the industry,” with some sectors recovering more quickly than others.

Bearish on cruise stocks, Allen is more optimistic about leisure travel than corporate travel. And he favors gambling within leisure. “We don’t think Covid has created any meaningful structural headwinds to people’s willingness to go to casinos,” he says.

Indeed, a big winner during the pandemic so far has been regional gambling. Boyd Gaming (BYD), for example, is up 135% since Barron’s recommended it in May, and Penn National Gaming (PENN) is up more than 250% this year.

But the run-up means investors must be discerning. “Whether it’s cost cuts or whether it’s the pace of the recovery, there’s a lot of good news in these things,” says Deutsche Bank lodging and gambling analyst Carlo Santarelli.

Spread across the country in places like Biloxi, Miss., and Evansville, Ind., regional gambling properties typically serve customers who live within an hour’s drive and who focus on gambling—not entertainment, conventions, or events.

“Regional casinos have benefited tremendously from the fact that in a lot of states, they are the only game in town right now, with everything else closed,” Santarelli says. The regionals also benefit from the buzz about the growth potential of online sports betting and igaming, or online casino gambling, in which they’ve been investing. Caesars Entertainment (CZR), for example, is acquiring London-based sports-betting firm William Hill (WMH.UK).

Allen says he doesn’t “expect regional casino revenues to get back to 2019 peak levels until the second half of 2022 or 2023, but that is way faster than where we think Vegas or hotels will recover.”

Many lodging stocks have run up as well, though not as much as regional gaming shares. Allen says that, from an operational perspective, those lodging firms “with higher leisure exposure are better positioned than those with higher corporate exposure”—one example being Choice Hotels International (CHH).

Another example is Wyndham Hotels & Resorts, which gets about 70% of its business from leisure travelers and benefits from a lot of domestic drive-to business.

“The concern right now has been looking at that rising case load,” says Ballotti, the company CEO, referring to Covid. Still, he says he sees some encouraging signs for the hotel business: “People are feeling safer, especially to get in their car and drive someplace. They feel they can do it safely and responsibly.”

Barron’s spoke with a number of analysts and portfolio managers to find stocks with good potential value. Here they are:

Compared with lodging companies such as Marriott International and Hilton Worldwide, Wyndham is more of a value play. It was recently trading at about 12.5 times enterprise value to estimated 2022 Ebitda, versus more than 16 times for Marriott and Hilton.

Wyndham, the world’s largest hotel franchising company, focuses on midscale and economy customers, segments of the market that have held up better than higher-end properties. As of Dec. 12, year-to-date revpar for economy hotels was down 20.9%, compared with the total in the corresponding 2019 period. Luxury revpar was down 57.6%.

Wyndham caters to “the business traveler that has to be out there on the road,” Ballotti tells Barron’s, adding that essential workers are key members of that group. “We saw a great pickup in the infrastructure business,” such as cable and utility workers. Health-care workers are another important constituency.

Robert Mollins of Gordon Haskett Research Advisors observed in a Dec. 16 note that Wyndham “is uniquely positioned to capture ‘drive to’ leisure” customers and “blue-collar business transient demand—telecom, front-line workers, infrastructure—all workers that can’t WFH,” or work from home. He has the stock at a Buy.

Unlike most leisure stocks, Wyndham continues to pay a quarterly dividend, cut to 8 cents a share from 32 cents this year. The company is looking to increase it in 2021. The stock, which yields 0.6%, has returned about minus 10% this year, though it has more than doubled off its March pandemic lows.

Cruise stocks, down more than 80% at one point during the initial Covid wave, have been volatile during the pandemic. And just when there will be sailing from U.S. ports again remains up in the air.

Still, Norwegian Cruise Line Holdings (NCLH), the smallest of the three major U.S. cruise operators, could be an interesting play whenever North American operations do resume in 2021.

“When we talk to the very large travel agencies, they tell us very clearly that the best booking/reservation demand for future cruises right now is on your higher-end, luxury cruises,” says Scholes, the Truist analyst. He has a Hold on Norwegian and peers Royal Caribbean Group and Carnival (CCL).

Roughly 15% of Norwegian’s fleet capacity is dedicated to luxury, much higher than it is for Royal Caribbean and Carnival, Scholes says.

Norwegian does have a lot of debt, including some taken on this year to stay afloat as its fleet sits idle. As of Sept. 30, its long-term debt totaled about $10.6 billion, up considerably from about $6 billion at the end of last year. And its recent valuation of 10.5 times enterprise value to estimated 2022 Ebitda is hardly cheap. Based on consensus FactSet estimates, the cruise operator isn’t expected to return to profitability until 2022.

But the company’s luxury brands, notably Oceania and Regent Seven Seas, operate fleets with smaller ships, in many cases with under 1,000 berths—a potentially more attractive option to customers in a post-Covid world who want to avoid larger crowds. Those vessels, says Scholes, are “less crowded and cramped than a mass market three-days-to-the-Bahamas trip.”

James Hardiman, a Wedbush analyst who rates Norwegian Outperform, observed in a recent note that the company “has positioned itself to eventually emerge from the pandemic and ultimately flourish.”

Caesars Entertainment’s shares have done well this year, up 26%, reflecting how strongly regional casinos have snapped back.

Although Caesars has several signature Las Vegas properties, including Caesars Palace Las Vegas, it derived about three-quarters of its third-quarter revenue from regional gambling operations. That gives Ceasars, which merged with Eldorado Resorts in an $8.6 billion deal in July, some protection as it waits for Las Vegas to recover.

Jefferies’ Katz says that the company’s Las Vegas business “is loyalty-driven, meaning that they don’t have the same large-scale events and conventions” that other gambling companies have. Conventions and events have been decimated by the pandemic, eroding Las Vegas traffic.

To broaden its reach, Caesars is acquiring William Hill, a sports-betting company with which it already had a partnership. “They put together the assets to be a major player in digital gaming,” says Katz. He has Caesars at a Buy.

The stock looks relatively inexpensive versus some of its peers. It was recently trading at 11.5 times enterprise value to estimated 2022 Ebitda, in line with its peer average and well below the 17.2 multiple for Penn National, according to J.P. Morgan Securities.

One thing to be aware of: Caesars does have a big debt load. As of Sept. 30, it totaled about $15.2 billion in long-term debt against total shareholders’ equity of $3.4 billion. But helped by the cash flow from its regional gaming properties, Caesars should be a solid bet, even after its recent run-up.

Trading recently at a little under 10 times enterprise value to consensus 2022 Ebitda, Marriott Vacations Worldwide sports a premium valuation among its peers in the time-share industry. But the company, whose shares have held up in a year in which many haven’t, looks worthy of that valuation.

The time-share business is helped by a lot of recurring fees and many customers who travel by car. Though sales have been pressured by the pandemic, they did show some improvement in the third quarter, compared with the total in the previous three months.

In a note after Marriott Vacations’ third-quarter earnings release in November, J.P. Morgan analyst Brandt Montour characterized the company “as a way to play a recovery in U.S. leisure travel.”

He cited the company’s “diversified footprint, with a majority of resorts drive-able, and linkage to a higher-end loyalty program” as attributes that “collectively positions [Marriott Vacations] uniquely among its time-share peers.” He rates the stock Overweight.

The company is expected to lose 46 cents a share this year, and then return to profitability in 2021 at around $5 a share, according to FactSet. As of Sept. 30, its liquidity, including $660 million of cash on its balance sheet, totaled more than $1.3 billion. Net debt was about $2.7 billion.

Marriot Vacations gets about 20% of its sales from Hawaii, which was shut down earlier in the pandemic, but which has reopened.

“You’ve really got nowhere to go but up,” says Truist’s Scholes. “And there’s a tremendous amount of pent-up demand for Hawaii.”

Extended Stay America (STAY), which caters to customers who need lodging for more than a week, has held up reasonably well during the pandemic. Its third-quarter revpar declined 14.7% from the level a year earlier. That’s a respectable result, considering that upscale and luxury hotels have seen revpar decline by more than 50%.

The stock isn’t garnering as much respect as those of some other lodging companies, however. Although well off of its pandemic-induced lows in March and April, Extended Stay America has returned about minus 4% this year, dividends included.

To preserve cash, the company did cut its quarterly dividend in May, to a penny a share from 23 cents a share. But this past week, it declared a special payout of 35 cents a share. The stock yields 0.3%.

Extended Stay America is expected to earn 24 cents a share this year—down from 95 cents last year—and 56 cents in 2021, according to FactSet. It was recently trading at about 10.5 times enterprise value to estimated 2022 Ebitda, a fair valuation compared with those of other lodging stocks like Hyatt Hotels (H) and Marriott International.

Extended Stay’s third-quarter results showed some encouraging signs, one being that its systemwide occupancy had been running close to 2019 levels in recent months.

The company has about 75% of its locations in suburban settings—as opposed to cities—and the majority of its guests arrive by car.

In a Dec. 17 research note, J.P. Morgan said it expects the company “to continue generating solid/above peer operating fundamentals” such as revpar and occupancy.

Shares of Wynn Resorts (WYNN) are down about 18% this year, in part reflecting the company’s exposure to Las Vegas. Last year, it generated about a quarter of its $6.6 billion of operating revenue from Sin City. In addition, Wynn isn’t getting help from China’s Macau, where it gets the bulk of its revenue, due to Covid and restrictions from the Chinese government.

Still, Morgan Stanley’s Allen sees upside potential. Wynn’s customer base is higher-end and, he says, that will pay off when gambling rebounds in Las Vegas and other markets.

“That means you need fewer visitors to come back. It’s just that you need those visitors to spend more,” says Allen. “What we are seeing for the regional casinos that have reopened is that there are fewer visitors and people are spending a lot more.”

Wynn trades at about 13 times enterprise value to 2022 Ebtida estimates, a slight premium to rivals. Las Vegas Sands (LVS), which also has big exposure in Macau, was around 12 times, and MGM Resorts International (MGM), which is much more of a play on the Strip, was at about 10.2 times.

Still, Allen says, the company’s prospects are bright. He rates the stock Overweight, with a price target of $120, about 8% above where it traded recently. “The beauty of Wynn,” he says, “is that it somewhat takes the cream of the crop of the market, whenever the markets open.”

European Union’s decision to curb greenhouse gases is driving the latest rally, putting carbon credits on par with gold

Credits tied to carbon emissions are having a banner year despite a record drop in output from the power plants and steel mills that need them to operate.

The price of carbon credits, used by governments in Europe to curb greenhouse gases and traded by hedge funds and other investors, has risen 31% this year, putting it ahead of gold as one of the best performing commodity-linked assets. Intercontinental Exchange carbon futures traded Thursday for €32.08 a ton, equivalent to $39.08, just below their record highs hit earlier this month.

Driving the latest rally is the recent decision by the European Union to cut greenhouse-gas emissions by at least 55% of 1990 levels by 2030. Traders are also expecting regulations on the burning of fossil fuels will be tightened to meet the new target, including reducing the number of carbon credits available.

“It’s the pricing in of increased future ambition,” said Ariel Perez, senior carbon trader at commodities trading company Hartree Partners. “All that explicitly reduces supply and lower supply should lead to higher prices.”

Morgan Stanley upped its 2025 forecast for European carbon-credit prices in September to €76 from €44, meaning the bank expects current prices to more than double by the middle of the decade. The EU’s climate agenda has significant implications for the price of carbon credits, the bank said.

The prospect of high returns has drawn established commodities players into the carbon market. Banks like Morgan Stanley and trading houses such as Andurand Capital and Trafigura have all entered or expanded their positions in the carbon market in recent months.

Casey Dwyer, a portfolio manager and analyst at Andurand Capital, says his firm was initially interested in carbon only as it affected broader energy markets. “Over the last year, we’ve become interested in the underlying price dynamics of the market, and that speaks to the extent to which the market is growing and becoming more mature,” Mr. Dwyer said.

The EU launched its carbon-trading program in 2005 as part of its Kyoto Protocol commitments. The European Commission, the EU’s executive arm, grants credits to countries, which then auction them to steelmakers, power plants and other polluters.

The EU’s emissions-trading system is the world’s largest. On Dec. 4, open interest—or contracts outstanding—on European emissions credits hit a record value of more than €51.4 billion, up by a third from the same date last year, according to the Intercontinental Exchange.

There are similar but smaller carbon-credit trading programs in North America, including one that links power sectors in 10 Northeastern and mid-Atlantic states, as well as one that includes California and Quebec in Canada.

The Global Carbon Project, a nongovernmental research organization, expects global emissions to fall by 7% in 2020, a drop that is almost five times as large as the one seen in 2009 during the global financial crisis.

Yet carbon credit prices have surged. In addition to the expectations of tighter regulation, there are short-term factors driving prices higher, showing how the interconnectedness of the energy industry can ripple across sectors.

Earlier this year several French nuclear-power stations carried out maintenance work that took them offline. That, plus the rebound in economic activity following the first lockdown, boosted demand for natural gas to generate electricity. Natural-gas prices in Europe have soared more than fivefold since May to €6.10 per million British thermal units, according to S&P Global Platts.

Higher gas prices in theory should spur electricity generators to switch to cheaper, dirtier coal. But because coal releases twice as much carbon as gas, power plants need additional credits to burn it, sending the price of those credits higher.

In effect, the rising carbon-credit prices suppress carbon emissions by making it unattractive to burn coal even though the raw material is cheaper, said Trevor Sikorski, head of natural gas and energy transition research at consulting firm Energy Aspects. As a result, coal demand in Europe has dropped 15% this year according to the International Energy Agency, while the use of renewable sources such as wind and solar has soared.

Another factor: What is normally a two-week pause in credit auctions at the end of the year may stretch to as long as six weeks as the EU makes technical changes to the program.

Polluters have stocked up on credits anyway because of the holiday, said Mr. Sikorski: A longer pause in auctions and a snap of cold weather, which would boost demand for natural gas, could send carbon prices even higher.

Elon Musk, Tesla’s billionaire chief executive, said he’s open to the possibility of joining his various businesses under one umbrella, similar to Google’s corporate shakeup five years ago.

“Good idea,” Musk tweeted after being pitched the idea by David Lee, a Tesla investor and YouTuber. On Twitter Wednesday, Lee suggested Musk set up a holding company called “X” that would be the parent firm of Tesla, rocket builder SpaceX, tunneling outfit The Boring Company and brain-implant startup Neuralink.

It’s unclear whether Musk is seriously considering the move or just humoring one of his 41 million Twitter followers, as he often does.

Regardless, there is a notable precedent — Google formed a new parent company called Alphabet in 2015 to house its signature search engine and internet services operation alongside its other various businesses, such as self-driving car unit Waymo and artificial intelligence firm DeepMind.

There are a lot of lingering questions about how Musk would execute a similar restructuring, such as whether the X company would be publicly traded like Tesla or privately held like SpaceX, The Boring Company and Neuralink.

But Lee contends the move would make it easier for the world’s second-richest man to oversee his existing ventures and start new ones. Plus, he noted, Musk already owns the domain name for X.com, an online bank he founded in 1999.

“This is not a move focused on increasing market cap or stock price,” Lee said on Twitter. “Rather, this is a move focused on creating the structure for Elon to be able to continue to make big bets for humanity, and have the time to manage them.”

Tesla did not immediately respond to a request for comment Thursday. The electric car maker’s stock price was up about 2.7 percent at $663.61 as of 11:45 a.m.

Difference in performance of top and bottom managers hits widest level since 2009

The Covid-19 crisis has created the widest gulf in performance between top and bottom hedge funds in more than a decade, with sharp gains generated by several managers helping to revive interest in the industry.

Ructions that rippled through global markets in early 2020, followed by the enormous rebound rally opened opportunities not seen since the 2008-09 financial crisis. But that same wave of volatility also wrongfooted a clutch of the sector’s biggest names.

The top 10 per cent of hedge funds recorded average returns of 49 per cent over the 12 months to the end of November, the best performance since 2009, according to data group HFR. At the same time, however, the gap between the top and bottom deciles widened to 68.9 percentage points, marking the biggest difference in 11 years.

“Plenty of hedge funds nailed 2020,” said Andrew Beer, managing member at US investment firm Dynamic Beta Investments. Many “had their best year since the great financial crisis”.

Such performance is more reminiscent of the hedge fund industry’s ‘golden age’ before the crisis triggered waves of stimulus measures from central banks that dulled volatility, several industry participants said. The strong run by top funds has ignited renewed investor interest after years of lacklustre returns, they said. “Hedge funds have become investable again,” said one hedge fund investor.

Another investor described a “wall of money trying to get into hedge funds” next year, but added that some may struggle to place funds with their desired managers if they chose to close to new investments.

Pershing Square’s Bill Ackman, Caxton Associates’ Andrew Law and Saba Capital’s Boaz Weinstein are among the biggest winners from this year’s market swings. For managers positioned the right way, precipitous falls followed by even bigger rebounds in some assets provided the kind of moneymaking opportunities rarely seen in a largely-becalmed decade dominated by central bank bond-buying.

Directional bets as investors dumped risky assets in favour of havens in February and March were some of the most lucrative trades. Mr Law’s Caxton made a record 40 per cent gain, boosted by bets on government bonds, according to an investor, while Brevan Howard gained 24 per cent.

Lan Wang Simond’s Mandarin Offshore fund returned almost 28 per cent, bolstered by bets on technology stocks and by cushioning itself against the March market turmoil. Former Third Point analyst Jamie Sterne’s New York-based Skye Global gained 63.8 per cent, also helped by trading in and out of soaring technology stocks, according to numbers sent to investors, while Daniel Loeb’s bullish call on the US election helped him to a quick $400m profit and a 19.1 per cent gain this year.

Pierre Andurand’s Andurand Commodities made 64.6 per cent and his Discretionary Enhanced fund, which can take more risk, gained 152 per cent, after predicting oil prices would turn negative, while Vancouver-based Delbrook Capital surged 109 per cent, helped by bets on M&A in the gold sector.

Billionaire Jeffrey Talpins’ $17bn-in-assets Element Capital, which made a prescient prediction on the efficacy of the Pfizer Covid-19 vaccine, gained 15 per cent. Massi Khadjenouri’s Kite Lake Event-Driven fund notched up returns of 7.1 per cent. Izzy Englander’s $48.5bn-in-assets Millennium Management gained 23.3 per cent, while Connecticut-based Verition Fund Management made 26.5 per cent.

Buying protection against the sell-off was also highly profitable. Saba’s Mr Weinstein profited from a well-timed bet against junk bonds, as well as trading mispricings in firms’ capital structures, to gain 70.8 per cent, according to numbers sent to investors. Mr Ackman’s Pershing Square Holdings made 65 per cent, bolstered by a $2.6bn profit on credit default insurance, while 36 South’s $2bn Kohinoor fund, which buys option protection, is up about 73 per cent, despite some losses since March.

Several quant funds, whose trading is based on computer algorithms, also managed to outperform in a mostly gloomy year for the investment strategy. Systematica’s BlueTrend fund, run by Leda Braga, has gained 7.6 per cent this year.

Qube Research & Technologies, a $3bn hedge fund that span out of Credit Suisse nearly three years ago, is enjoying its strongest year on record, said a person familiar with its performance. And, despite several funds losing money trading over-the-counter markets, where liquidity sometimes dried up, Gresham Investment Management’s ACAR fund gained 8.5 per cent.

This year’s volatility also caught out some of the sector’s biggest names.

Billionaire Michael Hintze suffered a $1.4bn loss, driven by bad structured credit bets, in his flagship Directional Opportunities fund. He gained nearly 9 per cent in November, reducing losses this year to about 36 per cent, according to an investor update seen by the Financial Times.

It has been “arguably the most turbulent year in financial markets for a generation”, Sir Michael wrote in a recent letter to investors, also seen by the FT. He has repositioned CQS to profit from new opportunities and strengthened the firm’s senior management.

David Harding’s Winton Group, which made a controversial decision several years ago to move away from a style of computer-driven trading Mr Harding helped develop in the 1980s, suffered a 22 per cent fall in its main fund.

And in the US, Jim Simons’ Renaissance Technologies, widely regarded as one of the world’s top hedge fund firms, lost 33.3 per cent in its Institutional Diversified Alpha fund and 22 per cent in its Institutional Equities fund. Ray Dalio’s Bridgewater took a hit with its flagship Pure Alpha fund down more than 10 per cent, even as its All Weather fund has recorded gains. Machine learning specialist Voleon is down 8 per cent in its Investors fund, while its Institutional fund is flat.

Egypt uncovers Pharaonic treasure trove: ‘There is still more to find’

After discovery of sealed coffins, archaeologists say 5,000-year-old site has yet to reveal all its secrets

A vast desert site on the southern outskirts of Cairo, Egypt’s Saqqara necropolis is one of the richest Pharaonic sites in the country, boasting spectacular monuments such as the earliest known pyramid in Egyptian history as well as the tombs of kings, high officials and sacred animals.

After a spate of discoveries this year, Egyptologists say the 5,000-year old site has not yielded all its treasures and much remains to be discovered. 

Large caches of sealed ancient coffins — painted with brightly coloured scenes, still intact and containing well-preserved mummies — were discovered in October, untouched since burial millennia ago.

“What we see above ground is no more than 40 per cent of what exists below ground,” said Mostafa Waziri, head of the Supreme Council for Antiquities who led the Egyptian teams that made the latest discoveries.

“Saqqara is very rich, and there is still more to find. I think we can work on it for another hundred years.”

Not far from the Pyramids of Giza and adjacent to the ancient capital city of Memphis, Saqqara was used as a burial ground for millennia.

King Zoser, who ruled more than 4,600 years ago, built his step pyramid there and it remains a landmark rising above the site. It is the earliest pyramid and first stone building known in Egyptian history.

“Once Zoser was buried there, Saqqara became even more important because there was a greater reason for people to choose to be buried there to benefit from the blessings of the king,” said Salima Ikram, professor of Egyptology at the American University in Cairo. “It remained a cemetery way into the 8th century AD.”

Mr Waziri points to remarkable archaeological discoveries in Saqqara in the past two years including the decorated tomb of Wahte, a priest who lived in the 25th century BC, caches of gilded statues and unusual finds such as a mummified scarab and an embalmed lion cub.

The recently discovered coffins date back to what is termed the Late Period from about 664BC to 332BC. and some are from the subsequent Ptolemaic dynasty which ruled until the death of Cleopatra, its last queen, in 30BC.

The decorations on some of the coffins, said Mr Waziri, especially those from a trove of about 100 announced in November, suggest they belonged to high officials and senior figures.

In a year in which the pandemic has decimated Egypt’s tourism industry, officials have celebrated the new discoveries with big events, inviting diplomats and media to highlight the country’s riches.

The coffins will be exhibited at a series of new museums, including one in the Red Sea resort of Sharm el-Sheikh and in the huge Grand Egyptian Museum in Cairo which is due to open in 2021. Tourist arrivals in Egypt in 2020 dropped to 3m, less than a quarter of the record 13m who visited the year before, according to official figures

A television broadcast in recent days showed Mr Waziri being lowered into another burial shaft from which the coffins have not been removed. They appear stacked in layers around him covered in millennia-old dust, which he uses a brush to flick away to unveil colourful decorations.

Zahi Hawass, a renowned Egyptian archeologist who is working on another excavation in Saqqara, expects to announce new finds in early 2021. These too are coffins but this time from the New Kingdom — and therefore an even older era than the artefacts unearthed in recent months. “Saqqara was a stomping ground of kings,” he said. “Tutankhamun lived and died near here.”

The burial shafts were found in a part of Saqqara called the Bubasteion which once included a temple complex dedicated to Bastet, a goddess of love, beauty and motherhood depicted in the form of a cat. The coffin caches could contribute enormously to our understanding of the ancient Egyptians, argued Ms Ikram.

“If we look at the contents of each shaft in its entirety and compare the texts on the coffins, we could tell if the people inside are related because of bloodlines, trade and priestly association,” she said.

“We can also learn about coffin manufacture, the beliefs shared and if they were related to the cult of Bastet. It would be excellent if qualified scholars have a chance to examine the material and, most importantly, to publish it.”