P E N N
W E A L T H
P U B L I S H I N G
|
I N V E S T M E N T
I N T E L L I G E N C E
THE PENN WEALTH REPORT VOLUME 8/Issue 04 01 Nov 2020
The New Real Estate The Changing REIT Landscape
Are seismic shifts about to reshape the way investors look at real estate? Andrew Jackson’s Bank War The bank is trying to kill me, Sir, but I shall kill it.
Biological Weapons The world’s new greatest threat is quite ancient
IN THIS ISSUE Editor’s Desk: Write off Value Stocks at Your own Peril
ON PAGE 08 America’s Rare Earth Renaissance
ON PAGE 12 A REIT that is recession-proof?
ON PAGE 15 Four bright ideas being ignored
Copyright 2020. All Rights Reserved. Penn Wealth Publishing.
penn wealth
publishing Cover: Cell towers like those owned by American Tower and Crown Castle International will play a critical role in America’s 5G rollout. These companies are in the niche REIT industry. Photo licensed
9393 West 110th Street, 51 Corporate Woods, Overland Park, KS 66210 913.538.7174 2 Penn Wealth Report
www.pennwealthreport.com volume
8 issue 04
member.services@pennwealth.com
01 Nov 2020
Copyright 2020. All Rights Reserved.
WTealth he Penn . SW uccess ealth. report Happiness.
06 Front Matter
Weekly Business Report 12 American Campus Communities
04 Editor’s Desk
Despite operating in a recession-proof market, this REIT got hammered in spring.
Write off value stocks at your own peril: we have been down this road before.
05 The Year in Charts
With a concentrated group of holdings in strong niche real estate markets, this fund offers investors a unique play.
Strategic Vision
Under the Radar
In the election year of 1832, President Andrew Jackson delivered one of the most powerful vetoes in US history.
Fortress Value Acquisition Corp is funding America’s return to rare earth mining; it is about time someone takes the lead.
09 The World’s New Greatest Threat
Biological warfare is about as old as war itself, but the pandemic will be the catalyst for a massive ramp-up in America’s biosecurity effort.
Investment Intelligence 10 The Changing REIT Landscape
Real estate investment trusts can be dynamic, wealth-building, income-producing vehicles, but beware of the seismic shift about to take place.
In intriguing turn of events, the CalPERS chief investment officer abruptly resigns
A grocer, a diversified utility, a life sciences tech firm, and a bank loan fund: Four ideas that are being missed—or ignored—by investors and the press.
19
The Trading Desk 16
Actions we have taken at the Penn Trading Desk, plus a look at what other Wall Street analysts have to say, along with accompanying charts.
22 Strategic Income Portfolio 24 Dynamic Growth Strategy
Penn Global Leader Target Corp. notches a blowout quarter Disney’s restructuring plans do not assuage our concerns
Upgrades, Downgrades, & Trades
The Penn Strategies
The truly unthinkable is happening: San Francisco landlords are being forced to lower rental prices to retain tenants Ford desperately needed new blood, instead they simply transfused their own
15 Bright Ideas Being Ignored
Tactical Awareness 08 America’s Rare Earth Renaissance
18
14 Cohen & Steers REIT ETF
A look at some of the charts which shaped the news over the past few weeks.
06 Andrew Jackson’s Bank War
12
09
20
Sorry Apple haters, the iPhone 12 super-cycle is coming SpaceX selects Microsoft to run its Starlink cloud computing network
21 Top Quotes of the Week
26 Global Leaders Club 28 Intrepid Trading Platform 30 New Frontier Fund
Copyright 2020. All Rights Reserved.
01 Nov 2020
Penn Wealth Report
volume
8 issue 04 3
Penn Wealth Report
From the Editor/
Write off Value Stocks at Your Own Peril Investors are gobbling up growth stocks and shunning their value cousins; we’ve been here before.
I vividly recall the period. Perhaps it was the fact that I was a young broker with the daunting dual mandate of accumulating new assets while effectively managing those I already controlled. More than likely, however, it was simply the frenetic nature of the stock market at the time that made such an impact. In less than the span of a decade, between the mid- to late’90s and the early years of the new millennium, we went from glowing promises of an enduring and paradigm-shifting “New Economy” to a market crash and a massive reshuffling of the winners and losers. Suddenly, the vaunted growth stocks were dogs and the hated and impugned value stocks were on top—at least relatively. Take a look at the chart below. It represents the total return over the past decade of growth stocks versus the S&P 500 versus value stocks. The disparity is stunning. Growth stocks rose nearly 400% while their value counterparts were up just 155%. Examples of companies in the growth category include such
names as Netflix (NFLX), Salesforce (CRM), and Fastly (FSLY). In other words, companies with enormous P/E multiples and paltry to no dividend yields. The chart for the past ten years looks ominously similar to the growth versus value story of the 1990s. But take a look at the second chart, which quantifies the great reversal of fortunes that took place between 2000 and 2010. A 44% gain over the course of a decade (for value) may not seem that impressive, but it sure beats the 23% loss growth investors had to contend with. We love great growth stories, and aren’t against investing in tech names which have yet to turn a profit, but the growth over value argument being espoused by many market analysts sure sounds a lot like the “New Economy” argument they tried to sell us two decades ago. Having managed money through that incredible market period, here’s our advice to investors: You don’t need to sell your beloved growth names; just begin sifting through the earnings-rich value names to balance your portfolio. —MSH
Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210
Michael S. Hazell editor-in-chief
4 Penn Wealth Report
volume
8 issue 04
01 Nov 2020
Copyright 2020. All Rights Reserved.
Penn Wealth Report
The Month in Charts
Charts tell the story. Here are some of our favorites from the past month. For the top business and economic stories of the week, visit Penn...After Hours at www.penneconomics.com.
Muting the recovery... Many parts of our economy did, indeed, get a “v-shaped” recovery. Unfortunately, millions of Americans are still suffering the economic effects from the China-borne pandemic. Certainly nowhere near the 7 million claims mark reached in March, the most recent week’s 898,000 new claims reflects the announced furloughs and layoffs from companies such as Walt Disney, Hilton, and shipping giant Maersk.
Déjà vu... When these high-flying Internet tech names (you know, the ones which have never generated a dollar of net income) come crashing back to earth, it will be brutal for the investors holding the bag. Want a taste of what the carnage will look like? Look no further than cloud platform provider Fastly (FSLY $86). After a slight revenue miss, shares plummeted by onethird. At $86 per share, we still wouldn’t touch this hot potato.
A rare bright spot... There hasn’t been much to celebrate this year, but the pandemic was the catalyst for a positive metric (though the wonkish economists consider it a negative): the savings rate among Americans has skyrocketed. The long-term average of 9%, which is actually higher than we expected, was dwarfed by the 33% savings rate in the early months of the pandemic. Of course, this has been dropping precipitously as the lockdowns have subsided.
Copyright 2020. All Rights Reserved.
01 Nov 2020
Penn Wealth Report
volume
8 issue 04 5