FINSUM + Magnifi: Amp Up Your Portfolio with Robotic Stocks
March 2021
For years robotics was pigeonholed into major US manufacturing duties but new technology and
artificial intelligence are turning that around. Robots look to assist a much larger capacity with these
technology improvements, such as personal assistance, autonomous vehicles, biomedical assistance,
and delivery. Robotics was expected to have a CAGR of 25% from 2020 to 2025 so the growth is promising. Companies like Intuitive Surgical (ISRG), iRobot Corp (IRBT), and Rockwell Automation (ROK),
offer promising future growth prospects and value buys like ABB offer P/E ratios that are attractive
compared to the S&P 500.
FINSUM + Magnifi: ESG Grows and Branches into New Territory
March 2021
The pandemic has shifted the paradigm for many investors as they look to environmental, social, and governance (ESG) to make up a larger share of their portfolio. ESG will shape the future of investing but there is a new way to invest in green companies with a new twist. Sustainably linked bonds (SLB) allow firms to receive money for green energy initiatives but rather they will pay a penalty if they don’t meet expectations. Marilyn Ceci head of ESG development at JP Morgan expects SLB to hit $120-150 billion despite issuance since inception being only around $20 billion. SLB isn’t a threat to ESG as the industry is expected to grow from $270 billion last year to over $400 billion this year, but rather a compliment to the growing industry. ESG's ability to withstand the full business cycle is a testament to its future.
FINSUM + Magnifi: This Fintech Just Saw its Shares Surge Like GameStop
March 2021
Fintech company Upstart experienced a rally reminiscent of the Reddit-fueled GameStop frenzy weeks back as its stock jumped 171% over the last three trading days. However, fundamentals and not internet boards were the catalyst here. Upstart uses AI and machine learning techniques to underwrite consumer loans and passes this information off to banks that can better place borrowers. The company saw revenue growth due to a spiking 124,000 loan originations last quarter prompting the surge in stock price.
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FINSUM + Magnifi: Real Estate Set for Pandemic Bounceback
(March 2021)
Real estate investment trusts are poised for a rally as the economy begins to open. Many specific sub-industries like retail shopping malls and college dorms are ready for the biggest swings. It's not just these sub-sectoral swings either, in general REIT yields are up 3.5% outpacing the 1.5% of the S&P 500. Spirit Realty Capital, National Retail Properties, Macerich, Weingarten Realty, American Campus Communities, and Brixmor Property Group are all S&P mid-caps that have higher than average yields that could perform even better in 2021. These companies mainly comprise retail stores, shopping malls, gyms, college housing, and grocery stores. All industries will no doubt further benefit from the reopening.
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FINSUM + Magnifi: Video Games and Streaming Unite in New ETF
(March 2021)
A new ETF tapping into dual online crazes has been filed for the First Trust S-Network Streaming and Gaming ETF. The ETF will focus on platforms that allow gamers and creators to stream content, E-Sports, and internet gambling enabled platforms. The ETF will generally track the price and yield of the S-Network Global Streaming and Gaming Index. The pandemic has breathed extra life into an already growing industry, as video game sales were up 35% year over year. Streaming is on pace to be a $247.27 billion industry by 2027. Other competitors in this market segment are the Esports ETF (NERD), Global X Video Games and & Esports ETF (HERO), and VanEck Vectors Video Gaming and eSports ETF (ESPO).
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FINSUM + Magnifi: Mark Cuban Thinks You Should Know About This New Fintech
(March 2021)
Crypto and other Fintechs have blown up in mainstream popularity in the last couple of years, but Mark Cuban sees another Fintech just over the horizon, DeFi. Decentralized Finance, or DeFi, is the process of borrowing and lending money via a cryptocurrency. Rather than provide physical collateral, investors use other cryptocurrencies as collateral, and interest rates aren’t pegged to a bank but rather the market fluctuations of cryptocurrencies. This allows lenders to extract the interest a bank normally would and prevents borrowers from paying hefty bank fees. Cuban sees DeFi as reducing friction in banking. However, DeFi has its risks: there isn’t any deposit insurance and lenders or borrowers could lose depending on exchange rates. This risk will earn lenders higher returns than traditional lending routes.Read more
FINSUM + Magnifi: Brokers Need to Watch for Heavy New SEC Enforcement
(March 2021)
Brokers, those that are dually-registered, pretty much anyone covered by Reg BI, you should be on the lookout for a pending crackdown by the new Biden administration-led SEC. Industry insiders and former regulators are warning that enforcement of the new Reg BI rule is likely to be strict. Former chief of FINRA, Susan Schroeder, says that enforcement is likely to start soon (i.e. this year) and may be “very aggressive”. According to Schroeder, “Early enforcement actions will be predicated on things like policies and procedures, but by past SEC standards, that is very aggressive”, and if the enforcement actions “are predicated on things like inadequate training or failures to have policies and procedures, from a legal theory perspective, that’s aggressive”.
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FINSUM + Magnifi: Leisure Bookings have Airline Stocks Flying
(March 2021)
Many Airlines saw increases in stock prices on Monday as increases in bookings for spring and summer leisure trips saw an uptick. American Airlines, Arca Airlines, JetBlue, and Southwest all saw their stock prices jump ahead on the news, with the largest rising 7%. While the airlines don’t secure the funding until after the flight has taken off, the projections are looking better across the industry. The upticks in revenue projections are sizable but they were in a pretty grim spot previously as Covid continues to challenge the airline industry. Finally, the gains also reflect an increase in funding allocation from the new stimulus package. Airlines can expect to receive $14 billion in grants and loans to help facilitate costs, but stipulations have been put on future dividend payments and stock buybacks.
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FINSUM + Magnifi: World’s Largest Hedge Fund is Abandoning Bonds
(March 2021)
Bond yields are on the rise, from long-term Treasuries to corporate bonds. However, Ray Dalio, founder of Bridgewater, says it's time to drop the bond investing frenzy and to invest in real assets. Dalio has long been an advocate against holding cash and now seems to be taking a similar approach to bonds. Invest in assets that earn a higher return than inflation and have underlying value. Bubble fears are on the rise as government debt is getting out of control. Dalio suggests looking to non-dollar-denominated assets such as developing countries in Asia and China to diversify one's portfolio. Finally, watching how central banks react to the changing bond market will guide investors as to how they should react.Read more
FINSUM + Magnifi: Pharma Still a Value Play Despite Being a Key Industry in the Pandemic
(March 2021)
Most pharmaceutical companies kicked it into high gear to develop the Covid-19 vaccine, but they received very little investor attention compared to the overall market. Price to earnings ratios are among the lowest of any industry group in the S&P 500. Many drug companies will see their future earnings increase as we exit the pandemic because many American’s have halted their prescription use for smaller ailments during Covid. Pfizer has seen some of the most extreme value of the pharmaceutical companies, and ‘booster’ shots could sustain covid earnings. Lilly, AbbVie, Bristol Meyers, and Merck all have a promising future pipeline that could generate profits for future investors.
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