tv Barrons Roundtable FOX Business October 18, 2019 10:00pm-10:30pm EDT
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trying to achieve for years. be sure to follow me on twitter, facebook and instagram. next week i'll be talking with blackstone ceo steve schwartzman right here on "the wall street journal at large." thank you for joining us. ♪ ♪ >> barron's round table, sponsored by: this week or waze ceo weighs in on how carpooling just might save of the world. the outlook for embattled boeg eaof next week's earns, and bill nye again with surprising stock picks. barron's round table starts now. ♪ ♪ >> i'm jack otter, welcome to barron's round table where the sharpest minds on wall street prepare you for the week ahead. we begin with what we think are the three most important thing we think investors should be
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thinking about right now. netflix faces threats from rivals like disney and hulu. health care stocks have been left for dead, but solid earnings from unitedhealth and cooling concerns about medicare for all may revive them. and with the impending return of the embattled 737 max, what to expect for boeing ahead of next week's earnings. on the barron's round table tonight my colleagues, ben levinson and jack howe. jack, you've written an interesting cover story about it, you picked some winners and losers -- >> i was having a conversation on this subject this morning with my wife because this thing comes in the mail that says sign up for disney plus for a discount. should we to that? she said, yeah, the kids like -- i said does that mean we should cancel our cable bundle? i'm not sure. that's a conversation families all across america will be having over the next six months but a you've got new services
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not only from disney,cbs and viacom, something from nbc called peacock, warner media. so it gets very complicated quickly. i describe it as a total cluster flicks. they don't let me print that word in barron's, but i think i can say it on television. >> the streaming services displacing the old media, but you actually say comcast might be a good investment. >> it's surprising. we talk about cord cutting, you think cable must be really in trouble. look at the share prices. this year all of cable is up big because investors are coming around to the view that you need broadband. if you cancel that cable tv service, you might very well, you're still going to need that cable broadband, and that has better profit margins fine. comcast is in an interesting position because the landscape will be so complicated, they've got a shot at becoming one of the companies that rebundles for streaming services down the
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road. >> ben, health care has been very sickly, and you're bullish now. >> i am. this is a sector that's been dumped out, and it's so cheap right now, historically cheap, and yet it has everything that investors are looking for, steady growth, it's very safe. you have these overhangs of the opioid epidemic and the lawsuits, and you've had the whole thing with medicare for all. those are going to pass. there's going to be a settlement with opioids, and the democratic debate showed there's no agreement on medicare for all. there's going to be a role for unitedhealth going forward. that's a great company. companies like medtronic which are stable growers, it's a great place to go buy stocks right now. >> and i think what people are doing is they're letting their political beliefs getting in the way of their investing acumen. if you think about all the things that would have to happen for medicare for all, they'd have to win, democrats would have to win the senate, democrats would have to maintain
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unity. all of those things happening, not very likely. >> not very likely. and these stocks, they're just so cheap. this is a great time to buy even if they don't start going up right this moment. >> demography is in the favor of health care stocks. lauren, let's go to boeing. on friday that stock is down 7% on top of earlier losses. is this a falling knife we should catch? >> jack, not only should you not catch it, it's a whole silverware drawer -- [laughter] with those heavy serving pieces. i think what's happened to boeing has made it very difficult to handicap where the stock is going to go. the latest news, on top of the two crashes of the 737 max, is that it looks like the company may have withheld negative information about the plane from regulators. any way you cut it, this is not good news. >> let's say they get that plane back in the air, right? these days people can see every last detail, including the type of plane. is there a risk that that plane
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becomes a brand name with people sa i want to fly that model of plane? >> that's going to be the safest plane that's out there when it comes back. >> do you think they change the name? >> i think it's possible. the two things to watch for boeing are any sign of progress that the plane is going to be flying again. and then, as jack indicates, whether customers are actually comfortable booking themselves, their kids, the family vacation, anything on the boeing 737 something. >> let's be a little bit fairer to boeing. in health care we talked about the long-term demographics being in favor of health care stocks. with flying there's airbus a boeing, that's about it. certainly once again, as the middle class around the world grows, people want to fly to see each other, so do you think long term is there a time to get into boeing and five years from now we will have forgotten about the problems? >> there's definitely going to be a time to get in, and you're
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going to know it when they start talking about getting the plane back in service. long term, as you say, there are two players, and boeing's stock will be higher. >> certainly the new airbus planes are beautiful, i've got to say. one other thing to think about when it comes to this is will the foreign versions of the faa approve this plane. i mean, it strikes me that even if the faa says that, okay, the plane's ready to fly, what if the french say, well, no. in fact, we don't want these 737 max -- >> that's a good point. and does it complicate matters that, let's be honest, there are otherren countries out there that want compete. right now we're only talking about europe. coulddown the road we might be talking about china. the. >> coming up, should you invest on your political outlook? with we weigh in on that and more. but first, i spoke to waze ceo noam bardin about how the
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♪ ♪ >> one analyst calls it a buried treasure inside google parent alphabet. it's waze, the navigation app that helps you avoid traffic and speed traps. ceo noam bardin says it's also reducing traffic congestion by connecting commuters for carpools. can they really help save the world? noam bardin, thanks so much for joining us. >> thank you for having me. >> at barron's, you seem to have ways more than google maps which is much more widely adopted, i think's 67% of the market,
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you've got about 12%, but the pros seem to use you. why is that? >> we only do driving. that's the only experience. if you are a professional driver, commuter, etc., we give you a lot of value you wouldn't necessarily get from wider apps. the map apps have to do lots of different things, public transit, search, it, and we specialize in one thing. >> do you make fun of the google maps people? >> no. we work very well together. [laughter] >> so 130 million active users. how do you monetize that? >> via ads, we have location-based ads, and we specialize in being able to drive foot traffic into your store. our users are on the go, they're driving, is so our platform helps them find specific locations, whether it's restaurants, businesses, etc. and that's kind of a next step in advertising, digital advertising is very well established, but now we're talking about the real world. and that that's kind of where we're centered. >> so if i've been driving for three hours, i might be hungry, and you're going to serve that to me on the map?
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>> exactly. and you probably don't know where you are at that time and actually need to find theas station. we're going to find you the cheapest gas, those types of things. >> obviously, we've had privacy issues with a lot of big tech companies. how do you draw that line between giving me what i need but not dig too deeply into my personal life where i am? >> we're an app. we're not an operating system. so you can turn us off whenever you want. but if you're using us, you're going to share the data with us, and we're going to use that to help the person driving behind you. it helps each other ear. it helps each other here. >> and nationally you ruled out your carpool app about a year ago what's the thinking behind that. >> when you look at your daily commute, look around you, 75% of americans drive alone in their car. you've got four empty seats and, frankly, traffic is getting worse. we all feel it. we see it mathematically. it is getting worse. and so if we can get more people to leave their car at home, get into a car with their neighbor and drive to work with them, we
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can actually remove cars from the road and lower congestion, and this is the product that we have. we'll deal with the friction, we'll find someone that lives next to you, works next to you, make sure the rider pays you for your fuel. we'll handle that in the background. all you have to do is opt into the service and make a small change in your behavior. you'll save time, you'll save money, and you'll actually help remove the congestion which is one of the top sources of co2 emissions. >> so you've handled the technological aspect, but you said it's actually the cultural part that was the most difficult. >> right. this is the biggest challenge, getting people to try it for the first time. what we've seen across everything is once they try it, people love it and keep doing it. so getting people to do it for the first time is a challenge because we've grown up in america thinking our car is our identity, right? being told don't get into a stranger's car, things like that. and this is really the challenge we have, and we give you all the controls. you can decide i only want to ride with people of my gender,
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with people from my work. you see who the people are on your social network and decide, you control who you ride with. these small communities get created of four, five, six people who live next to each other and begin sharing cars every day. >> so deep into the future at some point autonomous vehicles looks like that's how we'll all be transported, but there's a bunch of technological as well as cultural issues there. what do you think the benefits are of a world where we don't have a car in a garage, it just shows up when we need it? >> this is a world we're working towards or maybe, you know, 20, 30, 40 years from that, but whenever you want, you can get anything moved from point a to point b for practically nothing, right? and in that world, a lot of things change. how we produce our food. why have a garage in your house, right in why have parts? all these things can begin changing once we stop connecting cars with our identity and begin looking at them as a mode of transportation. we see this with the younger generation, they don't understand why they need to spend all this money on a car
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when they have other alternatives. carpooling is really about that, other alternatives. >> gotcha. might put waze out of business, but it'll be a better world. >> yes. and if we -- but at the same time, our cpooling product is going to help get more people into the car. the car drives itself but you're traffic.alone, we haven't solved we need to get multiple people in the car, and this is what waze is specializing in for our next step. >> thank you so much. >> thank you for having me. >> the panel comes back to the round table, what you can do right now to improve your portfolio. but first, legendary value investor bill nygren gets a seat at the table. that's next. ♪ ♪ chevy's the only brand...
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has been out of favor. we invited bill in to find out what he thinks the market is getting wrong and where he's finding value now. so, bill, in order to beat the market, you don't just want to have an index fund, you need to figure out what the market is missing, what you know. how do you think about that as a value investor? >> i think the biggest advantage value investors have is a long-time horizon. most investors are worried about short-term news flow than they are pe reevaluations, and since a stock price is its earnings, times its pe multiple, you kind of focus on one or the other. and we think by enduring potentially negative short-term news, we get a big tailwind on a pe revaluation. >> bill, what is the market focusing on right now that it really shouldn't be? >> i think there's an excessive focus on political risk right now in the stock market. i think we're all lucky that economic forces tend to be
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stronger than political forces, and it allows the stock market to go up over a long period of time despite politics in both parties that might not be best for the country's businesses. >> you've had a great long-term track record, but the last couple years have been tough. do you ever worry about the kind of secular chang that might have disrupted some of the companies in your portfolio? >> well, we do worry about that, but i think our portfolio has a lot of disrupters in it. we own alphabet which has youtube, one of the fastest streaming viewership growth rates. we have netflix, one of the fastest streaming growers. so i don't think our portfolio is full of companies that are likely to be disrupted. >> let me can ask you about streaming, because that's the subject of our cover story in barron's this week. we wrote positive hi about comcast, which you like. we wrote cautiously about netflix, which you also like. and what we wrote is basically the company is burning cash, and
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they've done very well with subscribers, they'll continue to do well because it's a good deal for consumers, but with all these new services coming out, it's getting more competitive. what are we not seeing and getting wrong? >> when we look at netflix, we see a similarity to the cable industry 30 year ago where they were losing a lot of money, had a lot of debt on the balance sheet, negative book value. subscribers kept trading at a price of something like $1,000 or higher. when at&t bought time warner, we think the implied valuation of hbo was at least $1,000 a subscriber. if you look at netflix, it has a market cap of somewhere around 150 billion, they're adding 25 million subscribers a year. it's only six times the value that's being added right now. >> there's a lot of talk about breaking up some of these big companies. not netflix, but you own google. what do you think that would mean for investors? on the one hand, they don't have that power of a conglomerate,
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but some people think the sum of the parts might be greater than the whole. >> right. we absolutely think the sum of the parts in a company like alphabet is more than what the stock is being priced at today. you look at the other segment that loses money that includes waymo, even youtube. they haven't really fully monetized that yet, and so it's not earning much money. but the hours being watched, if you valued it like a cable network, several hundred dollars a share. >> wow. >> the cash, a couple hundred dollars a share. when we look at it piece by piece and sub tract out those other businesses, we think we're paying well under market multiple for the google search business which has great tailwinds. >> so it'd be a good idea to break up the company? >> no. i think there are real advantages to having the pieces together. it makes alphabet a cool place to if, you know, they're not just doing search, but they're
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also working on waymo, makes it easier to attract high quality with engineers. but if they did break it up, we also known facebook, same thing there. we look piece by piece x we're quite comfortable with a broken-up facebook or alphabet would sell at a higher price than it does today. >> certainly noam bardin doesn't have to get on quarterly earnings calls at google, so that makes a lot of sense. what else are you excited about in your portfolio that maybe the rest of the world isn't too excited? financial's a very heavy weighting. >> right. i think investors are way overweighting the memory of the great recession ten years ago. the typical recession doesn't affect the banks anything like the last recession did. and because of those fears, a high quality retail bank like bank of america's held to nine times earnings. it might not grow its net income much, but it's repurchasing more than 0% of its shares a year, and -- 10% --
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>> that's, if it's not organic growth, because rates are coming down, that's enough to get you excited? >> yeah. i think one of the opportunities is investors tend to pay for more organic growth than growth that comes from capital return. we treat them equally. >> bill nygren, thank you so much. appreciate it. up next, our parting shots. the round table gives investment advice for the coming week. stay right there. ♪ ♪ limu emu & doug and now for their service to the community, we present limu emu & doug with this key to the city. [ applause ] it's an honor to tell you that liberty mutual customizes your car insurance so you only pay for what you need. and now we need to get back to work. [ applause and band playing ] only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪
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if you haven't had the six month sabbatical that you need to figure out what the heck it means, you've made it this far withouting with called -- without being called out on it, don't get found out now in conversation. i've written for people a guide to pretending to understand brexit. >> and i even learned something about the name, it's or something of a port man doe. let's get the investment advice. >> well, ubs said if you get anything but a worst case scenario, you can do well in some u.k. shares like a home builder named taylor wimpe if lloyd's banking group. >> what if viewers can't actually remember those names in. >> i've got advice for that. if you get backed into a corner, you don't remember the stocks, it's pretty easy to just make up fictitious names of british companies. you take some sill bills, put them in a way -- sill bills, i
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bought shares of bottomsworth and wiggles -- >> i'm going to call my broker. >> one of ben's core holdings. >> let's get some real advice from ben. what have you got for us? an idea viewers can take away from the show? >> i wish i had something like nike, these things are complicated, but right now they're so hated that you can get them for huge discounts to what they're worth. >> close-in funds, hold a basket of securities but then they sell for less than they're worth. >> that's right. they're they're like etfs before they were etfs. >> you'll sell for more than you bought -- >> that's exactly right. >> lauren, what have you got for us? >> another word for goldman sachs, the company had disappointing third quarter earnings, stock is trading for 8.5 times earnings, less than book value. it's trailed its fears for the past five years, and i think an
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opportunity could be here. >> lauren, ben, jack, thank you. great ideas. to read more, check out this week's edition at barron's.com. that's all for us tonight. see you next week on the barron's round table. ♪ >> it was exciting. bette davis, marilyn monroe, joan crawford. >> a star-struck teen bit by the bug. >> before there were paparazzi, there was jack kuster. >> this autograph hound takes names like no other... >> elvis and, oh my gosh, robert redford. >> you name it, all of them. >> it's probably the best collection in the world. >> ...and leaves his stunned heir a lot to sort out. >> what, in your wildest dreams, is this collection worth? [ theme music plays ] ♪
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