An Ominous Warning for Wall Street: 4 of the Most Prominent Value-Focused Billionaire Investors Are Net Sellers of Stocks
Over the last century, stocks have stood on a pedestal above all other asset classes. While everything from Treasury bonds and housing to various commodities, including gold, silver, and oil, have delivered positive nominal returns for investors, none of these other asset classes comes remotely close to matching the average annualized return of stocks.
But just because stocks have consistently outperformed over extended periods, it doesn’t mean Wall Street’s major stock indexes move up in a straight line.
In 2024, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have reached record closing highs on multiple occasions. Yet based on the actions of some of Wall Street’s most prominent value investors, trouble may be brewing.
Wall Street’s most successful value-focused billionaire money managers offer a silent warning
The sails for the Dow, S&P 500, and Nasdaq Composite have been lifted by the artificial intelligence (AI) revolution, stock-split euphoria, a resurgent U.S. economy, and the prospect of a Federal Reserve rate-easing cycle boosting demand for loans.
Despite this positive news, select billionaire money managers haven’t been shy about pressing the sell button of late. While trading activity has been mixed among active hedge funds and predominantly growth-oriented asset managers, some of Wall Street’s best-known value investors have been decisive net sellers of stocks.
Arguably no value-focused money manager is better known than Berkshire Hathaway‘s billionaire CEO, Warren Buffett. The appropriately named Oracle of Omaha isn’t shy about sitting on his hands and waiting for emotion-driven selling to create price dislocations in time-tested companies with sustainable competitive advantages.
For seven consecutive quarters (through June 30, 2024), Buffett and his investment team have been net sellers of equities to the tune of almost $132 billion. Berkshire Hathaway is sitting on an all-time record $276.9 billion in cash, cash equivalents, and U.S. Treasuries, through the midpoint of the year.
But Buffett is far from alone.
Pershing Square Capital Management’s Bill Ackman is an undeniable value investor who seeks out contrarian stocks. Though Pershing Square’s Form 13F shows two new holdings were added during the June-ended quarter — Nike and Brookfield — selling activity in five other holdings, including Alphabet and Chipotle Mexican Grill, handily outpaced buying activity.
It was a similar story for “Britain’s Warren Buffett,” billionaire Terry Smith of Fundsmith, during the second quarter. Smith, who has a knack for finding amazing deals hiding in plain sight and prefers to hold time-tested businesses for lengthy periods, reduced his fund’s stakes in 37 out of 40 holdings.
Appaloosa’s value-focused billionaire chief David Tepper was active on sell-side trades during the June-ended quarter, too. Although Appaloosa’s 13F shows that nine holdings were added to in the second quarter, two were sold outright, with 26 other positions reduced. Interestingly, some of Tepper’s most notable reductions were among growth stocks, including Nvidia, Meta Platforms, and Microsoft.
While this selling activity may signal nothing more than simple profit-taking, it’s more likely that it’s a silent but ominous warning from some of the smartest investors on Wall Street of trouble to come.
Stock valuations are pushing into historic territory — and not in a good way
Let me preface this discussion by stating that “value” is in the eye of the beholder. Every investor perceives value and risk differently when putting their money to work on Wall Street. With this being said, we’re currently witnessing one of the priciest stock markets in history, dating all the way to the early 1870s.
There are a lot of ways to measure value, with the traditional price-to-earnings (P/E) ratio being the most well known. The P/E ratio divides a company’s share price into its trailing-12-month (TTM) earnings per share (EPS). This figure can then be compared to the TTM P/E ratios of its peers or major stock indexes to determine relative cheapness or priciness.
While the P/E ratio has its uses, it can also be easily disrupted. When shock events occur (e.g., COVID-19 lockdowns), the P/E ratio becomes ineffective in helping investors locate/decipher value.
The one measure of value that’s far more encompassing, and has a flawless track record of forecasting large moves in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, is the Shiller price-to-earnings ratio, which is also commonly known as the cyclically adjusted price-to-earnings ratio (CAPE ratio).
The S&P 500’s Shiller P/E ratio is based on average inflation-adjusted earnings from the previous 10 years. Examining 10 years of earnings history, and adjusting it for the effects of inflation, provides an apples-to-apples comparison that minimizes the impact of shock events.
When back-tested to January 1871, the S&P 500’s Shiller P/E has averaged 17.16. But as you can see from the chart above, it’s spent almost the entirety of the last 30 years above this mark. The internet making it easier than ever to access information and place stock trades, coupled with lower interest rates, increased the willingness of investors to take risks.
But there comes a point when this risk-taking becomes excessive. The unofficial line in the sand that’s represented a problem for Wall Street is a Shiller P/E reading above 30. For context, the S&P 500’s Shiller P/E closed above 37 on Oct. 9, which marks the third-highest reading during a continuous bull market throughout history.
There have been only six occurrences, including the present, where the S&P 500’s Shiller P/E has topped 30 dating back 153 years. Following all five previous instances, the Dow, S&P 500, and/or Nasdaq Composite lost at least 20% of their value, if not considerably more. In other words, the Shiller P/E has a flawless track record of forecasting eventual bear markets on Wall Street.
What the Shiller P/E can’t tell us is when these declines will occur. There’s no rhyme or reason as to how long stocks can be remain pricey in the short term. History merely shows us that extended valuations aren’t sustainable over long periods.
I don’t believe the selling activity we’re witnessing from four of Wall Street’s most revered value investors is coincidental. More than likely, it’s in response to the stock market being historically pricey. Having dry powder at the ready to take advantage of possible price dislocations, just like Buffett, Ackman, Smith, and Tepper, may be a smart move.
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An Ominous Warning for Wall Street: 4 of the Most Prominent Value-Focused Billionaire Investors Are Net Sellers of Stocks was originally published by The Motley Fool
ROSEN, A LEADING LAW FIRM, Encourages Sage Therapeutics, Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action – SAGE
NEW YORK, Oct. 11, 2024 (GLOBE NEWSWIRE) —
WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of securities of Sage Therapeutics, Inc. SAGE between April 12, 2021 and July 23, 2024, both dates inclusive (the “Class Period”), of the important October 28, 2024 lead plaintiff deadline.
SO WHAT: If you purchased Sage securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the Sage class action, go to https://rosenlegal.com/submit-form/?case_id=28360 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than October 28, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, during the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) zuranolone, a neuroactive steroid for the treatment of postpartum depression (“PD”) and major depressive disorder (“MDD”), was less effective in treating MDD than defendants had led investors to believe; (2) accordingly, the U.S. Food and Drug Administration (“FDA”) was unlikely to approve the Zuranolone New Drug Application (“NDA”) for the treatment of MDD in its present form, and zuranolone’s clinical results for MDD, as well as its overall regulatory and commercial prospects, were overstated; (3) SAGE-718 (dalzanemdor) was less effective in treating mild cognitive impairment (“MCI”) due to PD than defendants had led investors to believe; (4) accordingly, SAGE-718’s clinical, regulatory, and commercial prospects as a treatment for MCI due to PD were overstated; (5) SAGE-324 (BIIB124) was less effective in treating essential tremor (“ET”) than defendants had led investors to believe; (6) accordingly, SAGE-324’s clinical, regulatory, and commercial prospects as a treatment for ET were overstated; and (7) as a result of all the foregoing, Sage’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Sage class action, go to https://rosenlegal.com/submit-form/?case_id=28360 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
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Attorney Advertising. Prior results do not guarantee a similar outcome.
Contact Information:
Laurence Rosen, Esq.
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AW Properties Global Announces Proposed Senior Living Development Site and 11-Acre Residential Land Parcel Available Through Bankruptcy Sale in Burtonsville, Maryland
NORTHBROOK, Ill., Oct. 11, 2024 /PRNewswire/ — AW Properties Global, alongside its auction division AuctionWorks, announces November 26, 2024, as the bid deadline for the Chapter 11 bankruptcy sales of two distinct development sites in the Burtonsville, MD area. Both properties are positioned in strong growth corridors and present unique opportunities for development.
Site Ideal for Senior Living Development at 15300 Dino Dr, Burtonsville, MD 20866
The first property is an approximately 5.86-acre parcel located at 15300 Dino Dr, Burtonsville, MD 20866 ideal for senior living development. The property was recently entitled for the development of 176 senior living units with 210 beds, including independent living, assisted living, and memory care options:
- Independent Living: 92 Units, 119 Beds
- Assisted Living: 60 Units, 64 Beds
- Memory Care: 24 Units, 27 Beds
- Zoning: R-200 or TDR
- Entitlements: Assumed Approved
Situated in a rapidly growing area, this site presents an attractive opportunity for investors to meet the rising demand for senior housing. The property benefits from a prime location and a diverse range of amenities that cater to the senior community.
Residential Development Land Parcel at P365 Old Columbia Pike, Burtonsville, MD 20866
The second property is an approximately 11.14-acre parcel located at P365 Old Columbia Pike, Burtonsville, MD 20866, on the east side of Old Columbia Pike, west of Route 29 (Columbia Pike), and north of Spencerville Road (Route 198) in Montgomery County. The property is ideal for developing two single-family homes and is positioned in a scenic and well-established residential area.
● Zoning: RC (Minimum 5 Acre Lots)
Both properties are located in the Burtonsville area of Montgomery County, known for its quality residential neighborhoods and proximity to major thoroughfares, making them highly accessible and desirable for future development. This is a rare opportunity for developers and investors to acquire properties in a high-growth area.
Diana Peterson, CEO of AW Properties Global, commented on the strong demand for senior housing: “According to Senior Housing News, the senior housing market is experiencing significant growth, with units being filled at a much faster rate than they are being built. From 2021 to 2023, 28 senior housing units were absorbed for every 10 that were added, compared to just 7 units per 10 added between 2017 and 2019. This highlights a major opportunity for developers and investors to capitalize on a high-demand segment of the real estate market.” She continued, “The bankruptcy sales of these two sites present an outstanding opportunity for investors and developers to capitalize on the development potential in established, high-demand neighborhoods in Montgomery County.”
Sale Process for Both Properties
The sale of 15300 Dino Dr is being conducted by Order of the U.S. Bankruptcy Court for the District of Maryland (Greenbelt Division) in Case No. 21-10491-MCR Chapter 11 (Burtonsville Crossing, LLC, Debtor) and Case No. 21-10492-MCR Chapter 11 (Elderhome Land, LLC, Debtor), jointly administered under Case No. 21-10492 MCR. Bids must be received on or before November 26, 2024, at 5:00 PM (CT) and must be submitted on the Purchase and Sale Agreement available for review from AW Properties Global’s website.
The sale of P365 Old Columbia Pike is also being conducted under the same joint administration. Bids for this property must also be received on or before November 26, 2024, at 5:00 PM (CT) and submitted on the Purchase and Sale Agreement provided.
Interested buyers should review the requirements to participate in the bankruptcy sale process available on AW Properties Global’s website. For further information, please contact Diana Peterson at 312-218-6102 or dianap@awproperties.com.
For further details on the properties, the sale process, and the terms, or to obtain access to due diligence documents, please visit awproperties.com or call 847-509-2757.
About AW Properties Global
AW Properties Global and AuctionWorks, its auction division and online marketplace, are headquartered in Northbrook, IL. The AW Properties Global team is a sophisticated and dynamic group of seasoned brokerage and auction professionals, including attorneys, MBAs, and CPAs, who consult with their clients to help them reduce costs and maximize value across a portfolio or on an individual asset basis. Committed to client satisfaction and excellence in real estate consulting, investment sales, brokerage, and auctions, the AW Properties Global team seamlessly merges local market expertise with extensive global reach.
The AW Properties Global team provides premier commercial and residential real estate consulting, brokerage, and auction services across all regions, complemented by equipment liquidation services, sales of going concern businesses, and lease restructuring services. Specializing in dispositions of real estate and real estate with a business and/or equipment, the AW Properties Global platform includes investment sales, accelerated sales, online auction sales, sealed bid sales, bulk/portfolio sales, sale leasebacks, UCC foreclosure sales, and bankruptcy/363 sales. For more information, visit awproperties.com.
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SOURCE AW Properties Global and AuctionWorks
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Buying Medical Properties Trust Taught Me a Costly Lesson
Medical Properties Trust (NYSE: MPW) is my largest investment in a single real estate investment trust (REIT). I built that position up over a decade and a half by steadily buying more shares of the healthcare REIT. The main draw was its high-yielding dividend.
That investment paid off for a long time. However, the healthcare REIT has come under tremendous pressure in recent years due to an issue I completely overlooked: tenant concentration. Medical Properties Trust leased a significant percentage of its hospital portfolio to two tenants, which cost the company and its shareholders dearly when it ran into financial troubles. That taught me to pay much closer attention to customer concentration and quality when investing in any company.
Not diversified enough
Medical Properties Trust is one of the largest owners of hospital real estate in the world. It owns several hundred facilities leased to many different hospital operators. However, two tenants comprised a meaningful percentage of its total assets and revenues for many years. For example, at the end of 2022, the REIT’s rent roll consisted of:
|
Operator |
Properties |
Percentage of Total Assets |
Percentage of Revenues |
|---|---|---|---|
|
Steward Health Care |
41 |
24.2% |
26.1% |
|
Circle Health |
36 |
10.5% |
11.9% |
|
Prospect Medical Holdings |
14 |
7.5% |
11.5% |
|
Priory Group |
32 |
6.6% |
5.3% |
|
Springstone |
19 |
5% |
5.8% |
|
50 Operators |
302 |
38% |
39.4% |
|
Other investments |
0 |
8.2% |
0% |
|
Total |
444 |
100% |
100% |
Data source: Medical Properties Trust.
While the REIT had over 50 tenants, five supplied more than 60% of its revenue. That became an issue as Steward Health Care and Prospect Medical Holdings ran into financial troubles.
Those issues led the REIT to work with these large tenants to help them navigate their financial problems. For example, in May 2023, Medical Properties Trust reconstituted its $1.6 billion investment in properties leased to Prospect Medical Holdings in a series of transactions. It converted some leases into an equity interest in that company’s managed care business. Meanwhile, it temporarily suspended rents in California, with partial repayments resuming last September and full rent commencing this past March.
Medical Properties Trust also tried to keep Steward afloat by providing financial assistance and temporarily reducing its rent. However, those efforts weren’t enough, and Steward filed for bankruptcy earlier this year. The REIT was finally able to sever its relationship with Steward last month, which enabled it to find new tenants for many of the properties it formerly leased to that company.
The REIT’s issues with two of its largest tenants weighed heavily on its stock price (shares are down nearly 80% from their peak a few years ago). It has had to sell properties leased to financially stronger tenants to repay maturing debt. It also cut its dividend twice.
Lessons learned
The biggest lesson I’ve learned from investing in Medical Properties Trust is to carefully consider customer concentration and quality when investing. The higher the concentration of a single customer, the greater the risk that the client’s issues will become a problem for that investment. Likewise, if a company has a high concentration of financially weaker clients, that could also impact my investment in the future.
Medical Properties Trust has learned this lesson the hard way. That’s led it to focus on diversifying its tenant base by bringing in higher-quality tenants. For example, it agreed to lease its entire Utah hospital portfolio to CommonSpirit Health last year after the healthcare company acquired Steward’s operations at those facilities. CommonSpirit has strong investment-grade credit, which enhances its ability to meet its financial obligations. Securing such a high-quality tenant for those facilities enabled the REIT to sell a majority interest in the real estate to another investor to raise additional cash. Meanwhile, it recently agreed to replace Steward at 15 other properties with four high-quality operators as part of its bankruptcy settlement with Steward.
As a result of that agreement, the REIT has achieved the objectives it laid out in its second-quarter earnings conference call. CFO Steve Hamner stated, “Looking through the calendar to 2025 and into 2026, our expectation is that we will have a stable portfolio of hospital real estate leased to key operators in their respective markets with no exposure to Steward.” With that goal achieved, the REIT can focus on rebuilding its portfolio by adding new properties leased to high-quality operators to continue diversifying its tenant base. That should also enable it to rebuild its dividend.
It’s important to dig a little deeper
I didn’t pay enough attention to Medical Properties Trust’s tenant concentration as I built my position, which proved costly. However, I learned a valuable lesson: Analyze a company’s client base and quality because that could have a meaningful impact on its future results. Medical Properties Trust learned that costly lesson as well. With its tenant quality improving and its rent roll more diversified, it’s in a much better position to deliver the stable income and growth I initially expected as I built my position. That’s why I plan to continue holding, believing it can eventually make a full recovery.
Should you invest $1,000 in Medical Properties Trust right now?
Before you buy stock in Medical Properties Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medical Properties Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,130!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 7, 2024
Matt DiLallo has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Buying Medical Properties Trust Taught Me a Costly Lesson was originally published by The Motley Fool
1 Artificial Intelligence (AI) Stock-Split Stock Set to Join Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta in the $1 Trillion Club
Each of the six publicly traded companies with a market capitalization exceeding $1 trillion has played a significant role in the advancement and development of artificial intelligence (AI). Four of them have split their stocks in the last five years.
It might not be long before another AI stock-split stock joins the ranks. Broadcom (NASDAQ: AVGO) has emerged as a key supplier of AI data-center chip designs, complementing its other semiconductor designs and enterprise-software business.
With its market capitalization around $850 billion, as of this writing, Broadcom needs to gain 18% to reach the $1 trillion milestone. Here’s why it’s bound to get there.
A diversified semiconductor and software giant
Broadcom’s roots are in semiconductor design, and it has developed a strong portfolio of intellectual property that has served it well in the AI arms race among big tech companies.
Broadcom’s networking chips are essential infrastructure for AI data centers. While Nvidia‘s graphics processing units (GPUs) get all the headlines, it’s Broadcom’s chips that allow a company to get the most out of the billions of dollars it is spending on those GPUs. Broadcom’s networking chips ensure data moves quickly and efficiently from one server to another, improving the efficiency of the data center. No company can compete with Broadcom’s technology in this arena, and few customers would risk switching to a competitor due to the potential impact of using an inferior chip design and other switching costs.
Broadcom also has a growing custom chip-design business fueled by AI spending. Broadcom designs Alphabet‘s tensor processing unit (TPU), which Apple used to train its Apple Intelligence large language model (LLM). It’s also behind Meta’s MTIA chips, which help train and run Meta’s Llama model. Generative AI leader, OpenAI, is reportedly working with Broadcom for its own custom-chip designs as well.
Broadcom isn’t just an AI chipmaker, though. It holds a dominant position in wireless phone chips that improve 5G reception while extending battery life. It also makes WiFi and Bluetooth chips. Its chips are found in Apple’s iPhone as well as in many other high-end smartphones.
Broadcom has also made strategic acquisitions of enterprise software providers over the last few years, including Symantec and VMWare. It uses a land-and-expand strategy focused on selling multiple software solutions to a small group of large enterprise customers. That provides a growing and very sticky source of recurring revenue.
Powering the future of artificial intelligence
Broadcom’s networking chips are already essential infrastructure for AI. Over the next few years, more and more big tech companies will likely come to rely on its custom AI accelerators as well. Google and Meta are already spending heavily on custom silicon designed by Broadcom.
As AI development matures, investors can expect a greater focus on custom-chip designs like Google and Meta’s. That’s because these chips can be less expensive than general-purpose GPUs, and they use less energy for the same tasks. As a result, I expect them to account for a growing share of silicon in AI data centers.
Broadcom’s AI chips business is still a small piece of its operations, but it’s growing extremely quickly. Its ethernet switching-chip sales grew more than 4x year over year in the third quarter, and AI accelerator sales grew 3.5x year over year. Both should continue to drive strong results for Broadcom into the future.
The path to $1 trillion
Broadcom’s stock currently trades for about 29.5 times earnings estimates for 2025.
Broadcom should see improved earnings performance next year as it trims excess operating expenses related to its acquisition of VMWare in late 2023. Those trims should result in strong operating margin expansion. Even better, the long-term potential for operating leverage remains high even as its AI chips business scales and it builds its recurring revenue enterprise software business. Over time, Broadcom should see earnings growth outpace revenue growth.
AI chips could drive extremely strong revenue growth over the next few years. And with improved operating leverage, it should produce the earnings growth needed to justify its price-to-earnings (P/E) ratio.
In order to reach a $1 trillion valuation, Broadcom stock will have to reach a share price of about $214. That would put its valuation at roughly the same 29 times forward P/E at the end of next year based on current analysts’ estimates. If Broadcom can outperform expectations, it might reach the $1 trillion milestone even sooner.
Based on its current price and the current outlook for the business, it looks like the stock trades for fair value and could be worth a spot in your portfolio.
Should you invest $1,000 in Broadcom right now?
Before you buy stock in Broadcom, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,130!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 7, 2024
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Levy has positions in Alphabet, Apple, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
1 Artificial Intelligence (AI) Stock-Split Stock Set to Join Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta in the $1 Trillion Club was originally published by The Motley Fool
Boeing Announces 10% Workforce Reduction Amidst Ongoing Struggles, Impacting Nearly 17K Employees
Boeing BA has revealed plans to cut its workforce by about 10%, reportedly equating to approximately 17,000 jobs.
What Happened: The layoffs will unfold over the next few months, affecting executives, managers, and other employees. Kelly Ortberg, Boeing’s president and CEO, communicated this decision to staff via email. According to a Reuters report, these layoffs will impact nearly 17,000 jobs.
The company has been grappling with significant challenges this year, including the grounding of Boeing 737 Max planes in January following a mid-flight incident.
In July, Boeing accepted a guilty plea over crashes involving the 737 Max in 2018 and 2019, which resulted in over 300 fatalities.
Additionally, Boeing’s Starliner spacecraft, which transported NASA astronauts to the International Space Station in June, returned without astronauts in September due to technical issues.
Nearly 33,000 Boeing factory workers have been on strike since mid-September, further complicating the company’s situation. Ortberg emphasized the necessity of these layoffs to align with Boeing’s financial reality and future recovery plans.
The delivery of the first 777X airplane is now postponed to 2026, as stated in Ortberg’s memo.
Why It Matters: The layoffs come amid a tumultuous period for Boeing, marked by ongoing labor strikes and safety concerns.
The strike, which began on Sept. 13, has significantly disrupted production, leading to a projected drop in October deliveries. Despite attempts to negotiate with the union, no agreement has been reached, and Boeing’s credit rating has been placed under negative watch by S&P Global Ratings.
Adding to the challenges, the Federal Aviation Administration (FAA) recently issued a safety alert regarding the Boeing 737’s rudder system, further complicating the company’s situation.
The decision to cut health care benefits for 33,000 striking workers has also sparked criticism from the International Association of Machinists and Aerospace Workers, adding to the tension.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Energy Recovery Ventilators Market Projected to Hit USD 9.8 billion at a 14.3% CAGR by 2031 – Transparency Market Research Inc.
Wilmington, Delaware, United States, Transparency Market Research Inc. -, Oct. 11, 2024 (GLOBE NEWSWIRE) — The global energy recovery ventilator market (에너지 회수 인공호흡기 시장) is estimated to thrive at a CAGR of 14.3% from 2023 to 2031. Transparency Market Research projects that the overall sales revenue for energy recovery ventilator is estimated to reach US$ 9.8 billion by the end of 2031.
A prominent factor is the rise of smart home technologies. Integration of ERV systems with smart home automation platforms enables users to monitor and control indoor air quality and ventilation remotely, enhancing convenience and efficiency.
Request for sample copy of report: https://www.transparencymarketresearch.com/sample/sample.php?flag=S&rep_id=17549
Some prominent players are as follows:
- Mitsubishi Electric Corporation
- Daikin
- Panasonic Corporation
- LG Electronics
- Johnson Controls
- Munters
- Fujitsu General
- Carrier Corporation
- Nortek Air Solutions
- Dunnair PTY LTD.
Changing consumer lifestyles and preferences drive demand for personalized ventilation solutions. Customizable ERV systems that cater to specific needs, such as allergy prevention or humidity control, gain popularity among discerning consumers seeking tailored indoor comfort solutions.
The influence of health and wellness trends shapes market dynamics. The growing emphasis on holistic well-being prompts adoption of ERV systems equipped with advanced filtration technologies to remove airborne contaminants and improve respiratory health.
Government incentives and rebates play a significant role in market expansion. Subsidies and tax credits offered for energy-efficient building upgrades and HVAC installations incentivize adoption of ERV systems, particularly in regions with proactive sustainability initiatives.
Key Findings of the Market Report
- Plate heat exchanger emerges as the leading technology type segment in the energy recovery ventilator market, offering efficient heat transfer for ventilation systems.
- The commercial sector emerges as the leading application segment in the energy recovery ventilator market, driven by stringent energy regulations and sustainability initiatives.
- North America leads the energy recovery ventilator market, driven by stringent energy regulations and high awareness of indoor air quality standards.
Energy Recovery Ventilator Market Growth Drivers & Trends
- Stringent regulations and rising energy costs drive demand for energy recovery ventilators (ERVs) in residential, commercial, and industrial sectors.
- Concerns about pollutants and allergens spur adoption of ERVs to enhance indoor air quality.
- Sustainability mandates and certifications propel demand for ERVs in green building projects, promoting energy-efficient ventilation solutions.
- Rapid urbanization drives construction activities, creating opportunities for ERV installations in new buildings and retrofit projects.
- Innovations in ERV design and control systems improve efficiency and performance, catering to evolving market needs for enhanced comfort and energy savings.
Global Energy Recovery Ventilator Market: Regional Profile
- North America leads the market, driven by stringent energy efficiency standards and growing awareness of indoor air quality. With established players like Carrier Corporation and Johnson Controls dominating the region, North America boasts a mature market ecosystem and widespread adoption of ERV systems in residential, commercial, and industrial sectors.
- Europe, renowned for its sustainability initiatives, witnesses significant growth in the ERV market. Companies like Zehnder Group and Swegon AB offer advanced solutions compliant with stringent EU regulations, driving demand for energy-efficient ventilation systems in green building projects and retrofit applications.
- Asia Pacific emerges as a dynamic market, fueled by rapid urbanization and increasing emphasis on building energy efficiency. Countries like China, Japan, and South Korea lead in adoption, driven by government initiatives promoting sustainable development and green building certifications. With rising demand for ERV systems in residential and commercial sectors, Asia Pacific presents lucrative opportunities for both established players and emerging entrants.
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Energy Recovery Ventilator Market: Competitive Landscape
In the competitive landscape of the Energy Recovery Ventilators (ERV) Market, innovation and efficiency are key differentiators. Industry leaders like Mitsubishi Electric Corporation and Daikin Industries, Ltd. dominate with advanced ERV systems offering superior energy recovery and indoor air quality. Emerging players such as Renewaire LLC and Nortek Air Solutions bring innovative solutions catering to diverse market needs.
Stringent regulations promoting energy efficiency drive competition, prompting companies to invest in R&D for next-generation ERV technologies. With a focus on sustainability and performance, competition fosters continuous advancements, shaping the future of energy-efficient ventilation systems globally.
Product Portfolio
- Munters leads in innovative air treatment solutions, offering humidity control and climate solutions for various industries. Their cutting-edge technologies ensure optimal environmental conditions, enhancing efficiency, sustainability, and comfort in commercial, industrial, and agricultural applications worldwide.
- Fujitsu General is synonymous with excellence in HVAC systems, providing energy-efficient heating, cooling, and ventilation solutions. With a commitment to innovation and reliability, they deliver superior indoor comfort and air quality for residential, commercial, and industrial spaces globally.
- Carrier Corporation pioneers in heating, ventilation, and air conditioning (HVAC) systems, setting industry standards for efficiency and performance. Their comprehensive range of products ensures optimal comfort and energy savings for residential, commercial, and industrial applications, driving sustainability and customer satisfaction.
Energy Recovery Ventilator Market: Key Segments
By Technology Type
- Rotary Heat Exchanger
- Plate Heat Exchanger
- Heat Pipe Exchanger
- Run-around Coil
- Others
By Application
- Residential
- Commercial
- Industrial
By Region
- North America
- Europe
- Asia Pacific
- Middle East & Africa
- Latin America
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The bull market is 2 years old. Here's where Wall Street thinks stocks go next.
The bull market in the S&P 500 (^GSPC) began two years ago and is showing few signs of slowing.
Backed by the rise of artificial intelligence euphoria and a surprisingly resilient US economy, the S&P 500 has gained more than 60% in the past two years and is hovering near an all-time high.
Wall Street strategists who spoke with Yahoo Finance believe the bull can keep running wild. Barring any unexpected shocks, the path higher appears to be clear, with earnings growth expected to keep accelerating and the economy on seemingly solid footing as the Federal Reserve cuts interest rates.
A bull market for the S&P 500 was officially declared in June 2023 when the index rose 20% from its recent bear market low. History says this bull market still has legs. At two years, the bull market is well shy of the average run of 5.5 years. And the total return thus far, about 60%, is a far cry from the average 180% gain, per research from Carson Group chief market strategist Ryan Detrick.
In the past few weeks, several Wall Street equity strategists have made the case for the benchmark index to rise further into both year-end and into 2025, supported by accelerating earnings for the S&P 500.
“We continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted,” BMO Capital Markets chief investment strategist Brian Belski wrote in a September note when raising his year-end price target for the S&P 500 to a Street high of 6,100 from a previous target of 5,600.
On Oct. 4, Goldman Sachs boosted its year-end target to 6,000 and initiated a 12-month target of 6,300. Goldman Sachs chief equity strategist David Kostin did note, though, that already high valuations could limit the upside for how far the index can reach in 2025.
Risks to the rally
Strategists who spoke with Yahoo Finance agreed with Kostin that already stretched valuations present a challenge to how much higher stocks can go. Charles Schwab senior investment strategist Kevin Gordon noted that dating back to the mid-1960s, the only time valuations have been this stretched on a trailing 12-month price-to-earnings ratio were 2021 and the dot-com bubble of the late 1990s.
“This would tell you that the bull is much older or somewhat near the end of this life,” Gordon said.
But strategists often warn that a high valuation itself isn’t a proper tool for calling the end of a bull market. Stocks can trade at what are considered to be expensive valuations for longer than expected. What that does tell investors is that much of the good news that could push stocks higher might’ve already been priced in.
“If you look at what the market’s discounting right now, we’d say front and center, a big chunk of what’s being priced in is a soft landing sentiment,” Citi equity strategist Scott Chronert told Yahoo Finance.
Piper Sandler chief investment strategist Michael Kantrowitz noted that high valuations themselves aren’t why bull markets end. There needs to be a catalyst. He explained there are two common reasons market drawdowns happen: a spike in interest rates or a rise in the unemployment rate.
With inflation well off the boil of 2022 and the recent increase in unemployment stalling out, neither of the two downside catalysts are clearly in view.
There could, of course, be a surprise no one sees coming. But “it’s a little bit harder to see where the shock comes from,” Chronert said. “If things continue to play out incrementally, investors can handle a little bit of a change [to the economic narrative] here, a little bit of a change there … It’s when you get a more immediate unraveling, and it’s hard to really say that immediate unraveling is going to come.”
This sets the market up for a narrative shift. To Kantrowitz, the currently expensive valuations show that the bull market is likely moving from a macro-driven environment, where factors like inflation falling and other signs of economic resilience have pushed stocks higher, to one that is more based on the fundamentals.
“For this market to continue moving higher, and particularly to determine what stocks lead, it’s going to be all about earnings,” Kantrowitz said.
The bar for earnings remains high. Consensus estimates project earnings to grow nearly 10% in 2024 and almost 15% in 2025. The key for investors remains finding which sectors are seeing earnings growth accelerate rather than just staying steady.
And , according to Chronert, part of that story could come down to the two letters that defined the first part of the bull market: AI.
Chronert, who said his team is still a holder of the “Magnificent Seven” tech cohort, doesn’t doubt that the AI narrative will continue to manifest itself in the market. But after significant gains seen in those tech stocks over the past two years amid large earnings growth, focus may continue to shift to the broadening impact of AI on companies that aren’t making the AI chips or the cloud servers operating the new technology.
For AI to continue to have broader impact on the market and keep pushing earnings growth for the index above expectations, “you’ve got to have more companies delivering on the AI promise via margins [and] profitability metrics,” Chronert said.
He added, “It would be that sort of thesis that has to play out, and that’s going to take two to five years.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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These stocks are best-positioned to gain in the next wave of AI investment, Goldman Sachs says
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AI enthusiasm has rebounded in recent weeks after investors worried about returns over the summer.
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In the next wave of investment, Goldman Sachs analysts recommend “platform” stocks like Microsoft and Datadog.
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Analysts recommend stocks that will build a direct application of AI and allow for more widespread adoption.
Move over, Nvidia.
With artificial intelligence investment rebounding after excitement cooled over the summer, a new set of stocks is set to benefit from the next wave of cash flowing to the burgeoning sector, according to Goldman Sachs.
In the next round of AI investment, Goldman Sachs analysts say investors should look past the obvious picks—Nvidia and AI infrastructure companies—and toward a select set of platforms set to build out a direct application of AI.
“Our equity analysts believe ‘platform’ stocks, including databases and development tools, are set to be the primary beneficiaries of the next wave of generative AI investments. These platforms allow the best use of AI infrastructure while providing building blocks to construct next generation applications,” the analysts said in a Thursday note.
The analysts name Microsoft, DataDog, MongoDB, Elastic, and Snowflake as the best-positioned platform stocks as they roll out AI-integrated applications.
While many of those platform stocks have plunged this year on near-term fundamental weakness, they have historically low valuations and stabilizing revisions that set them up well as AI investment rebounds, the analysts say.
The analysts’ recommendations come as investors remain focused on Nvidia and the companies that build out AI infrastructure, such as semiconductors, cloud providers, and data center REITs.
The analysts say the share prices for those stocks will likely continue to increase, but returns will be driven more by earnings than valuations.
“Expected future returns could be constrained by elevated starting valuations, although valuations are historically a poor near-term signal for large-cap equities,” the analysts said, adding that with AI spend surprising less to the upside than before, that could make for more moderate returns for those “phase 2” AI infrastructure stocks.
In general, the platform stocks are the exception among other “phase 3” stocks—those with potential to monetize AI by generating incremental revenues like in software and IT services— because the timing of AI monetization is still uncertain.
The same goes for “phase 4” stocks, or companies that would benefit from widespread adoption in general since that’s likely still years away, the analysts said.
“We believe the roll-out of applications among Phase 3 stocks is a necessary condition before investors will gain confidence about owning Phase 4 stocks with the largest potential earnings gains from AI-related productivity,” they said.
The analysts’ comments come after flows into AI stocks dwindled over the summer as traders expressed worries over returns on big AI spending. That led to sharp underperformance in July, and in early August, Nvidia tumbled as much as 27% from its all-time high in June.
Now, the stock is back up to trading near its record high as the AI trade has reaccelerated in recent weeks amid interest rate cuts from the Federal Reserve and strong macro data.
Read the original article on Business Insider
Surprise! These 3 High-Growth Artificial Intelligence (AI) Players Are Looking More and More Like Value Stocks
Artificial intelligence (AI) stocks offer investors great potential for gains thanks to the promise of the technology to revolutionize many areas — from making companies more efficient to developing the next game-changing medicine, AI could make a huge mark on history. That’s why many AI stocks have roared higher, boasting lofty valuations, and many investors had the feeling that if they wanted to score an AI win, they would have to pay a high price.
But I have a surprise for you: Some very promising AI players actually are looking more and more like value stocks, as their valuations have reached bargain levels, considering their track records and future potential. They may not exactly have crossed the line into value-stock territory, but they’re close enough to prompt growth and value investors to take notice. Let’s check out three AI stocks that look dirt cheap right now and might offer you an excellent buying opportunity.
1. Super Micro Computer
Super Micro Computer‘s (NASDAQ: SMCI) earnings and stock soared earlier this year as customers flocked to the company for its AI data center equipment — products such as workstations and servers. In fact, Supermicro’s quarterly revenue, climbing into the billions, even surpassed its annual revenue as recently as in 2021.
Earnings remain strong, and the company even offered investors fantastic news this past week when it said it’s been shipping 100,000 graphics processing units (GPUs) for AI on a quarterly basis. The company works with top chip designers like Nvidia to integrate their chips into its equipment.
But recent headwinds have stopped the stock in its tracks. These include a report from a firm shorting the stock, alleging troubles at Supermicro, and a Wall Street Journal report of a possible Justice Department probe. At the same time, Supermicro has delayed its annual 10-K report. All of these elements have weighed on investor confidence.
I don’t recommend Supermicro right now for cautious investors until these uncertainties are resolved, but aggressive investors may consider a small position in this top AI player, as it’s trading for a bargain-basement price, at only 14x forward earnings estimates.
2. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), trading for 21x forward earnings estimates, is the cheapest of the high-growth tech stocks known as the “Magnificent Seven.” Yet, the company has a track record and future prospects that are just as exciting as those of these peers.
You probably know Alphabet best thanks to Google Search, the world’s most popular search engine, and advertising on Google generates the lion’s share of Alphabet’s revenue. But the company also has another very promising business that’s reached big milestones recently thanks to the company’s investment in AI. I’m talking about Google Cloud.
The cloud business reported a double-digit gain in revenue and a triple-digit increase in operating income in the recent quarter, and these metrics also reached important milestones. Google Cloud revenue advanced beyond $10 billion for the first time, and the business’ operating income rose past $1 billion. The company says its AI infrastructure and solutions for cloud customers have brought in billions of dollars in revenue this year — and more than 2 million developers are using these tools.
Alphabet is offering customers AI solutions for all of their needs, and also has applied AI to its Google Search business — so Alphabet could become an AI powerhouse over the long run.
3. Meta Platforms
Meta Platforms (NASDAQ: META) is another Magnificent Seven player trading for a very reasonable price, at 27x forward earnings estimates. The company is a leader in the world of social media, as it owns Facebook, Messenger, Threads, WhatsApp, and Instagram — and its investment in AI could reinforce its position here.
Meta pledged to make AI its biggest investment theme of this year, aiming to have on board the equivalent of 600,000 graphics processing units of compute by year end. The tech giant is working to develop AIs that all of its users could apply to their needs — from leisure to business. This should prompt us to spend more time on Meta’s apps, and in turn, advertisers may increase their already hefty advertising presence there in order to reach us.
Advertising represents most of Meta’s billion-dollar revenue today, so investing in an area that could secure advertising spending is wise. On top of this, Meta is going all-in on AI, so other products or services may be on the horizon. At today’s price, Meta is a great addition to the portfolios of investors with a focus on both growth and value.
Should you invest $1,000 in Super Micro Computer right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
Surprise! These 3 High-Growth Artificial Intelligence (AI) Players Are Looking More and More Like Value Stocks was originally published by The Motley Fool