Barron’s Weekend Summary: Barron’s list of the 100 Most Influential Women in Finance; As the pandemic winds down, tech companies may no longer have a monopoly on growth
* Cover Story: The women on Barron’s annual list of the 100 Most Influential Women in Finance, all based in the US, were chosen based on their achievements, leadership, influence in their organizations, and capacity to shape their firms or the industry at large in the future; This year’s list has 28 new names, including Erika James, the first woman—and the first person of color—to head the Wharton School at the University of Pennsylvania, and Cathie Wood, founder of ARK Investment Management.
* Tech Trader: “The problem when it comes to technology shares is that good news is bad news,” says columnist Eric Savitz. As the pandemic eases amid greater accessibility to vaccines, the market is prepping for boom times, which means tech companies no longer have the exclusive on growth investing—and higher rates spell trouble for fast-growing, high-multiple stocks that led last year’s broad rally.
* Trader: Many investors find themselves on the wrong side of the so-called reflation trade as the US economy heats up, with Treasury yields climbing, something not every index is built for; If credit markets can remain calm, the pain may only be starting for the market’s most expensive, best-performing stocks, says Christopher Harvey of Wells Fargo Securities; “Markets are nervous about rising inflation and companies are already feeling the price pressure. If companies pass on rising costs to customers, that would make inflation more widespread and would have serous implications for stocks.”
* Profile: Dan Hammer, managers of the $3.2B Pimco High Yield Mutual Bond fund, sees value in high-yield munis, which had net outflows in 2020, relative to investment-grade munis and other debt, such as high-yield corporate bonds—but he says it’s important to be selective (top 10 state exposures: Illinois, New York, California, Ohio, Texas, Florida, New Jersey, Georgia, Wisconsin, Pennsylvania).
* Features: 1) Story profiles Cathie Wood, founder of ARK Investment Management, who joins Barron’s 100 Most Influential Women in Finance list this year; Wood embraced active management when investing seemed inexorably tied to indexing, implemented stock-picking in active ETFs when large asset managers said it couldn’t be done, and bought companies that others thought were overpriced, a joke, or both; 2) Positive on MYTE: The Munich-based company, which caters to wealthy shoppers looking for help in finding their next designer handbag, pair of shoes, clothing item, or accessory, should benefit from the growing luxury market, and get a boost from expansion in the US and China, as well as from new collections for men and kids; 3) Positive on VRTX: The high-flying pharma company’s shares plunged last year after it canceled development of a once-promising drug after disappointing trial results, but the pullback has been overdone, and its pipeline beyond cystic fibrosis is coming into focus, creating an opportunity for investors; 4) Positive on LOW: Despite gaining nearly 40 percent during the past year, the home improvement company’s shares are languishing, with the potential for rising yields to slow housing and more consumer dollars to go to dining out when the pandemic ends—but concerns are probably overblown, and don’t change the fact Lowe’s is a turnaround story and is set to become more profitable.
* Follow-Up: Positive on MIK, SBH, BLKB: Barron’s profiled the companies last July when it looked for cheap stocks with no Buy ratings from Wall Street analysts, a “hodgepodge of businesses linked only by Wall Street’s disdain”—and yet they have all done quite well since then.
* European Trader: Positive on Sandvik: The company has taken a hit from slumping industrial demand as the auto, aerospace, and mining sectors grapple with the pandemic, but chief Stefan Widing has been reorganizing the business to focus on growth areas such as rock crushing equipment and automation software, and the shares are set to bounce back when economic activity increases.
* Emerging Markets: Semiconductors, also called microchips, are the top supply-chain priority for the US, given the sudden shortage afflicting auto makers worldwide, but since the dominant companies are in Taiwan and South Korea, altering the supply chain poses a challenge for Washington—and is a possible opportunity for investors.
* Commodities: “It has been a decade since the Japan nuclear disaster caused the energy industry to rethink the safety of the power source, but the event hasn’t led to the destruction of the market or uranium demand—and may have highlighted the importance of nuclear-power generation in the world’s efforts to provide clean energy.”
* Streetwise: Columnist Steve Hough says Volkswagen and VIAC are reinventing themselves—the automaker with its push into electric vehicles, where its scale could help it compete with TSLA, and Viacom with a shift to unified advertising and distribution teams, and by getting studio heads on board with streaming.