Barron's Recap: Market Beaters
This weekend in Barron's online: a look at an unusual mutual fund firm, and the prospects for National Oilwell Varco, Plum Creek Timber, Invesco and more.
"A Different Dimension" by Beverly Goodman.
This week's cover story in Barron's takes a look at how Dimensional Fund Advisors eschews stock-picking completely and still manages to beat the market consistently. The mutual-fund firm's investment strategy is based on the efficient-market hypothesis pioneered by Eugene Fama in 1965.
Dimensional Fund Advisors was established in 1981 by a pair of Fama's students, and it operates on a firm belief that stock-picking is too inconsistent and unpredictable to be a reasonable method of beating the market. They focus on others factors that can be exploited to provide market-beating returns. And more than 75 percent of DFA funds have beaten their category benchmarks over the past 15 years, as well as 80 percent over five years.
The article discusses the strategies further, including the "three-factor model" developed by Fama, along with the individuals, such as chairman and co-founder David Booth, who have made the firm a success. See what sets this firm apart from its peers, as well as the "unbelievable" line-up on its board. Also see how specific DFA funds stack up against their counterparts at other firms. There is even a breakdown of Dimension's 10 largest funds.
"Drilling for Value at National Oilwell Varco" by Jack Hough makes the case that a breakup this year of offshore-rig company National Oilwell Varco (NYSE: NOV) could unlock value. See why shares may have 30 percent potential upside.
Sandra Ward's "Its Trees May Grow to the Sky, but Not Its Stock" points out that Plum Creek Timber (NYSE: PCL) may offer a four percent dividend, but its shares are rich and the real estate investment trust is scrambling to fund its payout.
In "Invesco's Golden Moment," Lawrence C. Strauss suggests that money manager Invesco (NYSE: IVZ) is poised to shine in 2014 due to strong asset growth and shrewd acquisitions. There are rich opportunities and cheap shares here.
Filmmaker Alexander Payne, who directed "The Descendants" and "Nebraska," is the focus of Penta article "Cinematic Family Truths." See how his movies deal with issues that, if left unattended, often destroy a family's legacy and wealth.
"Gains by the Scoopful" by Steve Garmhausen offers best advice from financial advisor Michael Yoshikami, who serves his clients with a uniquely personal and lively style. In the article, he also discusses some of his current picks.
In Joseph H. Marren's "No Accounting for Government Cost," the author explains that the U.S. government's financial reporting is misleading, because political leaders have subverted the democratic process in order to advance their personal interests.
"If at First You Don't Succeed ..." is an editorial commentary by Thomas G. Donlan that focuses on the enormity of the task of trying to reform the American income-tax system.
Columns in this weekend's Barron's discuss:
- The fading allure of stock buybacks
- Potential trouble ahead for consumer discretionary stocks
- The small number of stock splits in 2013
- Low -priced shares outpacing their high-priced peers in 2013
- Signals for three percent GDP growth in 2014
- Questionable secondary stock offerings
- An ETF manager with a unique way to pare risk and maximize gains
- New base-station routers from Asus and Apple
- A shift in foreign investment in the United States
- The health care catastrophe
- 2013 as a stellar year in payouts
This weekend's Barron's online exclusives include:
"2014 Earnings Outlook" by Johanna Bennett. The analysts' prediction of a 10.6 percent rise in profits over the next 12 months seems too optimistic, according to the article. One main culprit: Corporate America has relied too heavily on share buybacks and cost cuts, instead of revenue gains, to fuel profit growth. Stronger revenue growth will be needed for the S&P 500 to expand its bottom line at a double-digit pace.
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