Happy 89th birthday, Warren Buffett; How American Tech Companies Compete With China's Internet Giants; Big Tech Shares Lose Their Luster; Why the Breakup of the Four Will Never Happen; The Fate of the World's Largest ETF Is Tied to 11 Random Millennials
1) It's Warren Buffett's 89th birthday today. HAPPY BIRTHDAY!!!
2) In one of our webinars last fall, Glenn Tongue and I shared our in-depth thoughts on How American Tech Companies Compete with China's Internet Giants (13 minutes).
3) This article in the Wall Street Journal earlier this week is probably a good contra-indicator: Big Tech Shares Lose Their Luster. Excerpt:
The FAANG trade is losing its bite.
Owning shares of Facebook, Amazon, Apple, Netflix, and Google parent Alphabet has given investors little upside over the past 12 months, depriving the long-running bull market of one of its biggest drivers.
All the stocks, with the exception of Alphabet, peaked last year and remain well below their records after a brutal selloff last fall wiped out billions of dollars in market value. The stocks have shed nearly $415 billion since August 2018 when their combined market value swelled to $3.7 trillion...
The FAANG stocks together account for nearly 20% of the value of S&P 500, giving them considerable influence over the direction of the stock market, analysts say. The group drove much of the decadelong rally, eventually becoming the most popular trade among big money managers through most of last year.
But the trade has been losing its luster, and investors have shifted into other bets, calling for a strengthening U.S. dollar, and, more recently, a rise in U.S. Treasury prices, according to Bank of America's monthly fund-manager survey...
Mutual funds cut their exposure to Facebook, Amazon, Netflix and Alphabet in recent months, pushing their positioning among those stocks down to one of the lowest levels since hitting a high in 2016, according to fund-positioning data compiled by Bank of America Merrill Lynch.
Now, Facebook, Amazon, Apple, and Netflix are all among mutual funds' biggest underweight positions relative to their benchmarks, according to Goldman Sachs data on fund holdings, while Alphabet remains the lone overweight for many managers.
4) I enjoyed this 16-minute conversation between NYU professor Scott Galloway and author of the insightful book, The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google, and Arete Research founder Richard Kramer. (Recall that Arete wrote the bearish analysis of Uber (UBER) and Lyft (LYFT) that I shared in Tuesday's e-mail.)
Kramer shares his take on each of the tech giants and shares Why the Breakup of the Four Will Never Happen.
5) This is a crazy story! The Fate of the World's Largest ETF Is Tied to 11 Random Millennials. Excerpt:
The fate of the world's largest exchange-traded fund rests on the health of a group of twenty-somethings.
Thanks to a quirk in the legal structure used to set up the SPDR S&P 500 ETF Trust, known as SPY, more than $250 billion rests on the longevity of 11 ordinary kids born between May 1990 and January 1993.
Those children are now carving out careers in public relations, restaurants and sales, spread around the country from Boston and Philadelphia to Alabama and Utah. But none of the eight spoken to by Bloomberg News was aware of their role in investing history.
Best regards,
Whitney