Barron’s Weekend Summary: Stock picks from Barron’s 2020 midyear Roundtable; An approach to playing the Palantir IPO; NOK’s potential
* Cover story: Stock picks from Barron’s 2020 midyear Roundtable: Mario Gabelli of Gamco Investors (NEP, AGR, Maple Leaf Foods, Davide Campari-Milano, GCP, HRI, Deutsche Telekom, Vivendi, SNE); Abby Joseph Cohen of Goldman Sachs (SK Hynix, CTAS, Daikin Industries, TT, ORLY, OSK); James Anderson of Baillie Gifford (Kering, BABA); Meryl Wittmer of Eagle Capital Partners (EEFT); Rupal Bhansali of Ariel Investments (CHL, Telefonica Deutschland, GSK, GILD, Roche Holding); Sonal Desai of Franklin Templeton (Franklin Income, GLD, Payden Emerging Markets Bond, FLCO); Todd Ahlsten of Parnassus Core Equity Fund (BKNG, KSU, MU); Scott Black of Delphi Management (BMY, ICHR); William Priest of Epoch Investment Partners (TMUS, TMO, SoftBank Group); and Henry Ellenbogen of Durable Capital Partners (BFAM, Abcam).
* Tech Trader: Investors hoping to speculate on Palantir’s initial public offering before it happens can buy SSSS, a Nasdaq-listed business development company that invests in pre-IPO tech stocks and had 19% of its assets invested in Palantir as of March 31; A third of SuRO Capital’s holdings are in edtech companies Coursera and Course Hero, which could see upside after a recent surge in the sector.
* Trader: “For much of June and early July, two sane and rational investors could have looked at the coronavirus outbreaks, equity valuations, and the prospect for the US economy and come up with opposite—and equally valid—conclusions,” but greater long-term clarity will likely emerge in the coming weeks.
* Features: 1) Positive on NOK: Formerly the most valuable European stock, Nokia’s shares have fallen by more than 90 percent since 2000, but there are reasons to think the worst is over as carriers around the world shift to 5G, a sector where Huawei has been a global leader but where Nokia and rival ERIC could gain ground as the US and other nations lock out the Chinese company; 2) Positive on NKE, LULU, YETI: In the coronavirus era, the companies have succeeded in connecting with customers emotionally, not just transactionally, by “selling more than the product” with strategies that include forging partnerships with musicians and athletes and creating robust social-media awareness; 3) Stock valuations are high, according to many measures, and the market may be overly optimistic about an economic recovery and a rebound in corporate profits next year—especially if the recent wave of coronavirus cases continues to rise—but many advisors say investors should manage risk by adjusting portfolio mixes rather than through hedging.
* Profile: David Copp and Brendan Lee, co-mangers of the TIAA-CREF Real Estate Securities fund, differ from their competitors by focusing on total return and not just yield—they seek companies with well-capitalized balance sheets, low debt levels, and management teams with a track record of prudent capital-allocation decisions (top 10 holdings: AMT, PLD, EQIX, CCI, SUI, ELS, SBAC, REXR, INVH, ARE).
* Follow-Up: FB is well insulated from advertiser defections, even with big brands like KO, UL, and SBUX pausing their spending—the social site has eight million customers, mostly small and medium-size businesses, buying ads, and a boycott won’t likely be a material issue.
* European Trader: Positive on ASML: Shares of the Dutch semiconductor-equipment maker are down because of a plunge in demand amid the coronavirus pandemic, but they have rebounded as workers in lockdown turn to the cloud for storage and buy chip-intensive laptops, and have room to rise further.
* Emerging Markets: “Animal spirits” appear to be running too free in China, which is good and bad news for investors: Bad because the surge in Chinese stocks is likely to prove short-lived, and good because it’s another sign that China, with its myriad fast-growing innovative companies, is inching toward a stabler environment for long-term capital.
* Commodities: “Lumber prices made a big comeback in the second quarter, with a nearly 60 percent jump for the period more than making up for a loss in the first three months of the year, as home builders rebounded from the initial effects of the pandemic.”
* Streetwise: “With fewer subscriptions to cable TV, Americans are becoming even more reliant on the internet,” says columnist Alex Eule. “That’s a scary thought for our information diet, but it’s a long-term opportunity for investors.”