One of the biggest problems in the ESG/Sustainable investing space is finding out whether specific companies actually fall within the scope of such considerations. The space is becoming slowly more transparent, but sorting good from bad companies is still one of the major search and cost challenges of investing in the area. Well today we have more info on a new screening tool, called As You Sow, which helps investors sort good from bad companies and find companies and funds which match their desires. The new tool allows you to screen for certain characteristics: “deforestation free funds”, “gun free funds” etc.
FINSUM: Every advisor has clients for whom ESG is an important consideration (especially those with clients trending younger) and this is quite a helpful (and free) tool.
A huge institutional investor is poised to make a fortune if markets plunge. The biggest hedge fund in the world—Ray Dalio’s Bridgewater—has reportedly placed a $1 bn+ bet that stocks will tumble. Using Goldman Sachs and Morgan Stanley, the firm has been building up the bearish position for months. The bet wagers that stocks will fall sharply by March and will pay off if either the S&P 500 or the Euro Stoxx 50 moves lower. Bridgewater reportedly paid $1.5 bn for the options contracts, roughly 1% of their AUM.
FINSUM: This is a huge bet. Normally you could argue that this might just be a hedge, but the size of the position makes it seem much more like a gamble than a hedge.
Value stocks have been in the doldrums forever. Growth stocks have been outcompeting for many years. One way to get some good performance is to stay away from value stocks as a whole, and instead focus on individual names. Here are some stocks that look cheap and have positive catalysts in the cards (from Bernstein Research): Hewlett Packard, Apple, Tyson Foods, UnitedHealth Group, Cigna, Anthem, Nielsen Holdings, Delta Airlines, and United Airlines.
FINSUM: Apple as a value stock seems rather questionable but we get the “mispriced because of how great its earnings are” logic. The airlines seem an interesting bet to us.
The car industry has not been doing so well over the last few years. After seeing a big surge in sold vehicles leading up to 2015, sales have fallen off and the industry has been in a slump. If demographics are any sign, things aren’t going to get much better any time soon. New data shows that the average car buyer is getting older, and worse, cars are staying on the road longer, hurting companies’ all important replacement cycle. In terms of the total number of cars sold in October, the US is back in the same territory as it was in 2002.
FINSUM: There is no point denying it—a lot of car prices have risen dramatically over the last two decades (versus salaries), so it is no wonder average buyers are getting older and cars are being held longer. More than half of buyers are now over age 55!
Many media outlets love to publish stories about bargain stocks (us included). However, there is a group of shares being pushed as a “great value” that are definitely not such, at least according to UBS. The bank says that the wide group of retail shares that have been mauled lately, including Macy’s, JC Penney, Kohl’s, TJ Maxx, and Ross are not a good value. These stocks have been hurt badly because of weak earnings and the general decline in brick and mortar, which falsely lead some to think they are a “buy”. “We think ongoing e-commerce disruption, plus tariffs, could cause not only these, but also many other public and private retailers to close stores in 2020 and beyond” says UBS, clearly showing that they don’t think the industry is out of the woods yet.
FINSUM: Retail has some juicy yields, but you really have to understand each stocks’ specific characteristics to know which ones to choose. This is an expert’s game. The cheat sheet is to lean towards discount retailers.