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COMMENT
US releasing oil from SPR today. Government policy has made a bit of a mess of this energy cycle. On one hand, pushing a green energy approach. But in the short term, we just don't have the supply to let us do that. Structural deficit in energy production is causing high prices. Releasing oil from the SPR is a drop in the bucket, but they're also handing out stimulus cheques for high gasoline prices, which encourages people to buy more gas. Government's doing everything it can to fight inflation, and prices at the pump are target #1.
Unknown
COMMENT
Stagflation. That's where prices are going higher and growth comes off the boil, but doesn't have to be recessionary. It's a real threat, with some of the highest inflation since 1970s-80s. Certain sectors do well, and others suffer. Stocks that do well are those that are part of the supply chain, are a scarce resource, and have pricing power: energy, commodities, materials, chemicals, base metals. Consumer staples margins get squeezed. You want to barbell high quality, cash flowing cyclicals such as energy and materials. Avoid some of the most expensive stocks and stocks that need expensive inputs for their products.
Unknown
HOLD
Being taken out. Merger arbitrage is where you buy it while it's being acquired, and you try to pick up the spread. Risk is the deal fails to close. Not a lot more opportunity here from the price offered. He's getting a 6-8% rate of return to hold it till the deal closes.
packaging / containers
COMMENT
Approach to buying stocks. His firm is quantitative. He looks at the facts, rather than reading research or talking to management. He's concerned with price momentum, valuation, and volatility. He wants to buy cheap, rising, stable stocks.
Unknown
BUY
Old tech is different from high flyers that aren't profitable, and these have been hurt the most. SPGI is high quality, solid ROE. Price momentum has come off, baby with the bathwater. Reasonably priced, no debt. Small yield, reasonable payout ratio.
publishing / printing
HOLD
Caught up in supply chain, issues won't be resolved quickly. Top 5% of value, solid balance sheet, 11x price to earnings. Reasonable payout ratio for yield of 3%. Top-notch management, world-class company. If you have time, hold. He'd want to see price momentum before stepping in.
Automotive
HOLD
All-time highs. Earnings beat, dividend raise. Solid company and management. Strong price trend, not expensive, very high ROE. 33x earnings looks quite rich, but it's actually reasonable in light of other metrics. High quality earnings and cashflow.
Consumer Products