Latest / Bloomberg Intelligence / Point View's Petrides: Energy Cos. Should Issue Stock (Audio)

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Point View's Petrides: Energy Cos. Should Issue Stock (Audio) · Bloomberg Intelligence

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  Speaker 1: Stocks are lower, the SMP five hundred index down sixteen
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  Speaker 1: and Dat's a Bloomberg business splash. Chipella thanks so much
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  Speaker 1: time now for the t F report brought to you
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  Speaker 1: by Vaneck Vectors ETFs. Expect more from your muni's target
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  Speaker 1: tax exempt income by majority and credit quality AH with
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  Speaker 1: access the opportunities for a report on e t F
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  Speaker 1: s our Own Catherine Cowtery, Peru maybe out, Pakistan maybe in,
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  Speaker 1: and China's allocation could more than double. Investors are awaiting
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  Speaker 1: m s c i's annual review and potential changes to
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  Speaker 1: its spense mark in taxes. Bloomberg Intelligence analyst Eric Beltuna
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  Speaker 1: says Pakistan was downgraded to frontier market status in two
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  Speaker 1: thousand eight and their speculation it could be raised to
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  Speaker 1: emerging status again. He adds there is positive momentum in Pakistan.
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  Speaker 1: It's got a infrastructure project with China that's moving forward.
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  Speaker 1: It's got population where half the people are under twenty five.
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  Speaker 1: It's larger than Russia population wise, um, but it's frontier.
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  Speaker 1: It's got a lot of issues as well, but it's
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  Speaker 1: up nine percent this year. There's an e t F
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  Speaker 1: focused on the country, the Global x MSCI Pakistan E
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  Speaker 1: t F take her p A K Valtunist on the
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  Speaker 1: impact of a possible ms C I move. Even if
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  Speaker 1: Pakistan makes it into the MSCI Emerging Markets, it would
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  Speaker 1: be point one waiting, I mean almost invisible. If you
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  Speaker 1: add it up, that's about two point four billion dollars
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  Speaker 1: worth of by orders for Pakistan stocks. P a k
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  Speaker 1: has about six and a half million dollars in total assets.
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  Speaker 1: That's your Bloomberg ETF report. I'm Katherine Cowdery is taking
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  Speaker 1: stock with Kathleen Hayes and Pim Fox on Bloomberg Radio.
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  Speaker 1: Shares of Apple are down about one and a half
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  Speaker 1: percent today as the company begins its annual developers conference
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  Speaker 1: in San Francisco. One of the announcements is that the
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  Speaker 1: Apple will connect Siri, the voice activated application, with other apps,
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  Speaker 1: and also it will be made to work on Mac computers.
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  Speaker 1: The company also ditching its os X brand for Mac
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  Speaker 1: os and the Apple Watch will get a faster operating system.
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  Speaker 1: Find out more. Let's bringing John Petridis. He is Managing
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  Speaker 1: director Portfolio manager, point View Wealth Management based in Summit,
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  Speaker 1: New Jersey. John, thank you for being with us, Thanks
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  Speaker 1: for having me on. So are any of these announcements
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  Speaker 1: today from Apple enough to make you bullish on the
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  Speaker 1: stock or are you still a bear? Still bearish on
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  Speaker 1: the stock? However, I do like that they're emphasizing the
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  Speaker 1: Apple TV. Um. I think that is where Apple needs
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  Speaker 1: to be concentrating all of its efforts. And now that
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  Speaker 1: you can download apps through the Apple TV, uh, you know,
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  Speaker 1: the goal would be for you and I to ultimately
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  Speaker 1: build our own ala card cable model through Apple TV
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  Speaker 1: and pay for the apps for each indidividual show rather
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  Speaker 1: than a Comcast or FiOS or someone like that, you know,
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  Speaker 1: two hundred a month. You know, let's pay it through
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  Speaker 1: Apple TV just for the shows that we want, as
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  Speaker 1: opposed to watching twenty at a five hundred different shows.
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  Speaker 1: So how important is this? Is this like, oh, it's
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  Speaker 1: another cool step, you know, just add on a little bit,
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  Speaker 1: or is this something that is potentially the you know,
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  Speaker 1: the big move that Apple needs. No, we're not there yet. Um,
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  Speaker 1: That's why I said this isn't This is going in
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  Speaker 1: the right direction, but you're far from where Apple needs
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  Speaker 1: to be. You know, there are rumors a few weeks
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  Speaker 1: ago that Apple was thinking about buying Time Warner and
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  Speaker 1: taking over HBO and taking on some other content. That's
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  Speaker 1: what Apple needs to do. They need to get away
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  Speaker 1: from being a pure hardware company and relying on iPhone
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  Speaker 1: sales and iPhone upgrades every two years. Uh, to be
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  Speaker 1: the driver of the company. They need to get their
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  Speaker 1: business model to where you and I are paying Apple
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  Speaker 1: a hundred dollars a month for services um. And if
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  Speaker 1: they don't hurry up on the content side, the meat
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  Speaker 1: be a content side, which is why I think they
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  Speaker 1: need to be They're gonna fall far behind because Google
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  Speaker 1: has YouTube, Facebook has Facebook Video, Amazon and building at
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  Speaker 1: its own content, Netflix has its own content. I mean,
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  Speaker 1: the world is changing an Apple and Tim Cooke's vision
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  Speaker 1: right now is still focused on getting an iPhone in
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  Speaker 1: everyone's hand when they should be working on the media.
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  Speaker 1: Tell us about Alexa from Amazon and how Apple needs
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  Speaker 1: to compete in that arena. Well, they are so. Alexa
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  Speaker 1: is a cute little toy that you could have in
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  Speaker 1: your house that you can be voice activated in Apple is.
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  Speaker 1: There have been rumors that Apple gonna come out with
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  Speaker 1: their own version of an Alexa. However, I don't know
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  Speaker 1: about you if you have an iPhone, but Siri has
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  Speaker 1: been a letdown experience for me personally, so you know,
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  Speaker 1: I find myself yelling at the device more than now.
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  Speaker 1: It's in and it still can't understand what I'm saying.
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  Speaker 1: So the fact that they're focusing on Siri um onto
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  Speaker 1: other devices, I think you need to work on series
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  Speaker 1: application itself and U you know that would be the
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  Speaker 1: benefit off if they can compete versus in Alexa. How
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  Speaker 1: would you compare Siri to the voice activated function on
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  Speaker 1: say the Samsung Note M. You know, I haven't played
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  Speaker 1: with the Note well enough to compare one versus the other.
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  Speaker 1: All I know is that for me. You know herey,
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  Speaker 1: we're now going on to iPhone seven that will be
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  Speaker 1: introduced in September. You know here he came out of
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  Speaker 1: the four s, which is what four years ago, and
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  Speaker 1: I still think that application is subpar at best. Now, John,
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  Speaker 1: I want to turn your attention away from technology when
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  Speaker 1: it comes to mobile phones and computers and turn your
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  Speaker 1: attention to energy and high yield bonds. What do you
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  Speaker 1: recommend individuals do and are their bonds or even stocks
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  Speaker 1: that are in the energy industry that you think are compelling?
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  Speaker 1: Vis right, So I would have continue to avoid the
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  Speaker 1: energy high yield bond space for now. Go back to
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  Speaker 1: January and say Bruary, when the world seemingly was falling
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  Speaker 1: apart and yields blew out on the high yield bonds.
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  Speaker 1: They particularly for energy companies when the price of oil
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  Speaker 1: is now was at twenty five bucks you know barrel.
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  Speaker 1: Now we're at fifty dollars at barrel. We've nearly doubled.
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  Speaker 1: And you know what I think energy companies should be
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  Speaker 1: doing today is actually issuing stock. You know, there were companies,
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  Speaker 1: the energy companies that were issuing stock back in January,
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  Speaker 1: figure in early March, really in the in the in
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  Speaker 1: the eye of the storm. Well, now with the price
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  Speaker 1: of oil doubling and in certain cases of energy stocks up,
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  Speaker 1: you know a hundred hundred fifty since then, now is
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  Speaker 1: the time companies should be issuing stock and focusing on
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  Speaker 1: their balance sheets because there is no uh, you know,
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  Speaker 1: the supply demand situation is although improving because drowing has
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  Speaker 1: really falling off a cliff in the US. You know,
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  Speaker 1: these companies need to start pumping out oil, and now
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  Speaker 1: is the time when they should be shoring up. They're
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  Speaker 1: like their balance sheets. So I think now is the
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  Speaker 1: time energy companies should be issuing stock to to focus
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  Speaker 1: in bringing up liquidity so basically then you're saying you
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  Speaker 1: would buy some energy stocks. What about Master Master Limited Partnerships. Yeah,
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  Speaker 1: I think that's where you're finding the area of the
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  Speaker 1: energy space that should be issuing the most in terms
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  Speaker 1: of stock. Because m LPs are usually the oil and
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  Speaker 1: gas pipelines, right they transport oil from point A to
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  Speaker 1: point B, and building out and maintaining those pipelines is
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  Speaker 1: very very expensive to do, and you need access to
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  Speaker 1: the credit markets, and right now, the credit markets are
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  Speaker 1: issuing bonds at very high interest rates because they're very
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  Speaker 1: concerned about the price of the commodity. So in order
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  Speaker 1: to UH to N m LPs pay out a big
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  Speaker 1: portion of the cash flow in the form of a dividend.
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  Speaker 1: So I think investors would actually feel comforted if MLP
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  Speaker 1: companies on the back of this stock rally issued shares
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  Speaker 1: freed up liquidity. That would that would UH secure the
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  Speaker 1: dividend because many income oriented investors, those that are in
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  Speaker 1: retirement are focusing on MLPs because they need that source
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  Speaker 1: of income, and that would actually help the space a lot.
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  Speaker 1: I mean, how often do you have someone on talking
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  Speaker 1: about companies that should be issuing stock. It's usually the
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  Speaker 1: opposite right, Usually the reward companies who buy back their shares.
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  Speaker 1: But here in the energy space, now is the time
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  Speaker 1: where company should be doing In the opposite, John, is
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  Speaker 1: now the time to invest in a company such as
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  Speaker 1: Chevron paying a dividend of a little bit more than
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  Speaker 1: four Yeah, Well, we believe in diversification and despite the
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  Speaker 1: rally in oil, you never know where the commodity is
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  Speaker 1: going to be, So a Chevron, an exn Mobile, a
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  Speaker 1: British Petroleum, you know, those big cat super major that
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  Speaker 1: are integrated, that have the upstream, that have the mid
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  Speaker 1: stream and a downstream on the energy are the right
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  Speaker 1: places that investors should be in because you can weather
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  Speaker 1: the downturn um if the price of oil was to
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  Speaker 1: go down, and you have a diverse business model and
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  Speaker 1: you'll benefit on the upside. So you know, it's it's
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  Speaker 1: it's unless you should be diversified across the different sectors,
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  Speaker 1: and we would recommend that you hide in the supermajors.
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  Speaker 1: Final comment on final question, could you wagh In on
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  Speaker 1: Microsoft acquiring LinkedIn? Sure? I think that this was a
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  Speaker 1: very interesting acquisition on Microsoft side, but I think it
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  Speaker 1: was very defensive in nature, and what I mean by
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  Speaker 1: that is Microsoft paid a forty nine percent premium for
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  Speaker 1: linked In nearly eight or over eight times sales. And
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  Speaker 1: if you're a shareholder of Microsoft, which which our clients
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  Speaker 1: do own, it's not a creative or it will be
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  Speaker 1: dilutive until two thousand and nineteen. And that's on a
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  Speaker 1: non gap basis. So what does that mean. That means
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  Speaker 1: you will not see a hit to the bottom line
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  Speaker 1: to the positive side for Microsoft cheryld's two thousand nineteen.
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  Speaker 1: And that excludes option dilution. And you know that there's
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  Speaker 1: massive option dilution within for LinkedIn shareholders. So and the
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  Speaker 1: reason why I think this is defensive is Microsoft described
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  Speaker 1: themselves as a platform and productivity company, and I think
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  Speaker 1: this acquisition they buy it ahead of someone like a
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  Speaker 1: Facebook or Apple or some other laws or Google. John
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  Speaker 1: but Tradeing, thank you so much for joining us, Managing Director,
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  Speaker 1: Portfolio Manager, point View Wealth Management. The Microsoft LinkedIn deal
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  Speaker 1: defensive on Microsoft's part, Still bearish on Apple. This is
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  Speaker 1: taking stock boom Brig Radio