tv Barrons Roundtable FOX Business February 16, 2020 9:00pm-9:31pm EST
ahead. i'm jack otter. we begin what we think are the three most important things investors should be thinking about right now. big tech acquisitions under scrutiny by the ftc about what it could mean for investors. mortgage originations are the highest level since 2005 as housing finally back on track? and trouble at bed bath and beyond and under armour shows the turnarounds are hard to pull off. what to expect for other struggling retailers for on the barron's roundtable my colleagues al roots, carlton english, and jack howe. this story was a little underreported and i don't think anyone knows quite what to make of it federal trade commission made a pretty stunning demand to tech companies saying we want data going back ten years on all the purchases and acquisitions we did not look into. that's nearly 500 deals for microsoft google and several others. >> and when is the right time for investors to panic because we've been talking for a long
time about these guys having too much power there has to be a reckoning coming is this the moment? >> i think you can look at a case study you can look at microflora soft. this is her second go around of being accused of eating the world. first it was '20 years ago they are still on top in terms of market. i think there is a path here where you come to a resolution were -- i think by the way you might also look at the president holding up for cameras the sheet with the mega stocks on at microsoft, apple, google and amazon. i know google's called alphabet now, he is proud of the rising stock. we are talking about abcs that are under the direction of the white house so if you are an investor you have to make some comfort in that. eric points out what you really should be worried about more than that are the self policing efforts on the part of these companies.
you can have apple and alphabet for example, doing things in their operating system to crack down on location tracking that could hurt the ability of a company like facebook to sell ads. jack: and think this a lot of political nuances you pointed out quite accurately president trump likes to see the success in this important part of the market. at the same time, republicans are accusing the social media companies and having anti- conservative bias. democrats meanwhile don't like the democrats on privacy. there's a lot of threads running here. gillibrand just said she wanted privacy agency. >> it's called the csi data protection agency that's gotta be coming down the road. this is not something going away. it's something you have to keep an ion. but you just have to move the backdrop in the context for these are companies, many of which are growing their topline by '20% a year. i don't think the valuations are crazy. sometimes i go '20 five times the earnings. there could be some breakup
and regulation. i don't know if it's something within a destroyed value. jack: we had built the stable while ago that he made the point while he doesn't like the idea, google would have broken up he thanks some of the parts were worth more than the hole and he would've made money for shareholders. >> it's possible. jack: outlets talk about something a little more mundane, housing from a stock perspective is not mundane at all. >> he said this mortgage applications have reached a new hyper elicited some of these stats. housing turn which is new-home sales and existing home sales up 11% in december paired housing starts up 50% year-over-year in december. mortgage rates down almost a% over the past year, that saves a person buying a three or 400,000-dollar house two or $3000 a year. so the sector has seemed to catch fire just all at once. the homebuilding stocks, stocks like dr horton, kb
homes, toll brothers, up '20% year-to-date already. they still only trade for about 13 times earnings. so you can take a step back and say you know what, maybe some of the fear of the horrible financial crisis when housing got hammered, maybe it's finally passed in the stocks can work. jack: leading up to the housing crisis we built former houses and anybody needed that start of the crash the way we do we get all these pent-up demand and i look to that before he came on the air you get a '20 year mortgage for the two handle lower than 3%. that's dennis person buying. >> reviewers all around the country who should really be popping the champagne right now? which region do you expect house prices are the best of your? >> as an unfortunate house seller in connecticut, not connecticut. it's a bit of a cliché, where you have migration, illinois, new jersey, connecticut those housing prices are stagnant. of course all real estate is local you have good markets, places that have immigration
and job growth in the southern u.s. is great. >> atlanta and austin, exactly you have a lot of tech jobs moving to those areas. jack: i want to go real quick on a call not so great sector that's retail. see medical it's interesting we talk but everything look at housing a look at bed bath and beyond a home good seller which has been massively underperforming. trying to become a turnaround story, they are trying to do the right thing. they put in the former merchandising headed target as a chief executive officer. but he faces a really tough task for your people are not going into the stores. this week they said this quarter they've already seen a five more than 5% drop in sales. they have assets to sell, they have to figure out their pricing, they have to figure out how do you get people excited to walk into the stores again? >> when you have a chain of stores there's one problem it people are coming in.
jack: jack, just in time for valentine's day, you had an interesting conversation with joey love then, he is running iac. specifically maps, tender, okcupid, did he hook you up at the tender account? >> and you can believe it some lucky lady out there already locked all of this down. it didn't require online games. we did have a chat lately and we wondered why now is the right time to divest online dating and what's next for this portfolio that's been a spectacular portfolio over time. >> joey the holding company you run, iac, is responsible for the explosive growth in both match and tender, the online dating services. in my book that makes you a love expert. so my first question before we get to the business i want one
insider tip on how someone can stand out online in the search for a relationship. not a fling joey, a relationship. >> while we own these businesses and we have done very well with these businesses, i don't know that i am a love expert. and truth is i have never been a customer of these businesses. so i'm not the best one to ask about that. and i will say this is the same with everything in business, try to be unique. get everybody, the vast majority of people start every combination with three letters, hey. it's really hard to stand out a future in the same thing as a% of the people are doing and you don't have any personality, try something else. try something that's unique about you or unique about the other person that gets a conversation going. >> tells her with pay. the distribution of the rest your holdings right here in match group including tender now, why is now the right time for this distribution? >> is not a perfect answer for
that. right now matches in a great moment in his trajectory. you talk about match group in total is growing very nicely. it's generating good cash flow and can stand on its own. when we look at whether to separate our businesses which is something we have done many times in our past, this will be our eighth i think of those. we look at what is the business that is separating its looking out what's the business thing behind looks like? do both of us end up in a better place by being separate? and the answer here is yes. in one of the factors is how much a match has grown and grown to integrate way overshadowed the rest of iac pride be like that growing process tonight to focus on that to grow again. you will still own most of angie's home services. i look at that to find a place to get find your reputable plumber. what's your long-term business vision for what that business can be calm. see. >> i'm glad to hear you think of us is that place and i'm glad think that too. when you think deep into the
future, i think you look to us for home maintenance entirely. changing the concept of home ownership. right now i live in new york city and i live in a condo building. so i have a superman my building who is consistent with a lot of people who live in apartment buildings. when you are a homeowner, most homeowners are not that great the components of owning a home. if you had a thing like a super you could rely on as reliably as a super, that's the kind of service we can helpfully provide over time that kind of reliability. p9 i was looking at the long-term returns for iac, two years, five years, tenures, '20 or scum if clobbered the market. what every spinoff something big wall street says he's not going to be able to do it again. are you going to be able to do it again? tell me about one or two other things you have cooking in the portfolio right now. >> i certainly hope we are going to be able to do it again. every time we've done it, people assume and can't do it again. we've got a great business and thought -- publishing business
that is the only growing digital profitable publisher out there for the new digital publisher with a bunch of different products in healthcare and lifestyle and finance. jack: right up there with barron's.com i just say? [laughter] >> exactly. invested pd on barron's i think there's something there we should talk about that. we've got that mio which is growing really nicely, it's a really nice tailwind in that every entity and is providing the tools for video storytelling today. it launched last week and new product if you've never created video before. and you talked about angie, angie is going to be a new piece of iac and that has kind of unlimited the frustration and time that people have in
the homeowner ship. speed nine you have a lot of pictures on where to invest. can you give me a key to success when you're choosing among deals? >> there are few things we looked at we look at the leadership of that business we like to buy businesses a very capable leaders. we look at the market they are in. we like to go in big markets of big opportunities of one of the key things we look for is where scale improves the product not just the price. what other kinds of businesses when you add on another customer, that product makes it better for all the other customers. you can imagine how that works in dating. the more people there on the platform to better describe her buddy on that platform. the more plumbers and the more homeowners on angie, the better it is for others on the platform. those are the kind of businesses we look for and it has worked. jack: your chairman has the votes, a lot of people think of him foremost is the guy who created the fox television network. but past the 20 years he has a
better investment record than warren buffett. what's your relationship there like? how active is he in the deals? or in the company operations and things like that? >> he is very involved in the deals. not in day-to-day involved in the operations, but we talk regularly or any nose would start going on in the business. we're on e-mail, phone, or meeting in person most days. jack: if i had this arrangement i would take credit for everything going up and blame you for anything going down you can tell me won't let them get back to him. always good to talk to joey, thanks. jack: coming up our ideas of what you can do now to improve your portfolio. and warren buffett is going to release his letter could switching to geico really save you fifteen percent or more on car insurance? do woodchucks chuck wood?
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jack: warren buffett is at the helm of berkshire hathaway since 1965 with buffett now approaching 90 years old, who could be his successor at what might the conglomerate due next to boost the stock? barron's associate andrew berry joins us now. you report a thousand dollars investment berkshire hathaway back in 1965 would get to about 20 million now versus i don't really have a hundred 50000 if you just put that money in an index fund, which didn't exist back then. but the same time wall street is not very happy with the article is going on? >> the reason is that investors worry about succession, who can fill his giant shoes. most of there's some concern that berkshires holding a lot of cash, over $100 billion in the buying back very little stock and not paying a dividend. >> with that huge cash power has everyone itching for him to make an acquisition.
>> i think some possible targets include airlines, which she likes, delta airline southwest, other possible targets could include fedex, ups, carnival cruise lines and even walgreens. kennedy: see you obviously have a better view of a berkshire hathaway than wall street does, what you think the market is missing about warren buffett right now? >> i think the market is missing that it's pretty inexpensive right now and the company has around $205 billion annually and there could be some positive developments in the next couple of years. >> andriy you and i have barron's work 10 feet from each other and i think that's too much distance i like it when you are on the show we are fighting a half apart from each other. everyone is talked about the buffett premium on berkshire. but now we are talking about maybe the value will be unlocked and the posted buffett world. is there still out buffett premium? >> i think the premium is back on track basely gone right now it can outperform the s&p 500 and the next five and ten years.
you can see financial break above the company, you'll probably see a dividend in the next couple year end a bigger stock buyback. >> did this happen before the succession to you think buffett will even start to sell or spin assets as part of the succession? always the debate they hold something forever. >> he likes to hold things forever and i think the view may be heat waits until he departs. i think there might be a bigger buyback program in the next year or two. there's also the possibility of the dividend, the companies holding a lot of cash and not doing much with it. there's a possible he, slim on the mic some major sale of businesses. >> with debbie good idea? >> that would be a good idea if they're large and almost unmanageable right now. he doesn't really manage it that well or closely. i think it will be a challenge for his success to keep the company together. >> so that successor, there's the three guys it kinda seen his front runners you handicapped them a little but can we go through them? >> i think the front runners greg abell who has brookshire
hathaway energy and i think a dark horse he's been at brookshire for the last ten or so years todd combs, who just got named to the top job brookshire's very profitable auto business, geico, that means he could be on the rise. jack: silly james who does insurance to see other pictures. >> he's made tens of millions of dollars for berkshire he's close to 70 now think he's too old for the job. >> could you explain the dynamic that he's able to help with. a lot of insurance companies don't make money on our premiums they just pay them right out for claims. but buffett uses this float, has our customer. >> there's been a hundred billion dollars afloat, most insurance company's lose money on underwriting they payoff more in claims and they do in premiums. berkshires is consistently profitable which is been very unusual and very beneficial. >> you think we have to move beyond fetid and forget it? s&p 500's beat every thing
under the sun is their point that will stop and maybe berkshire will return to think better after that? first of all buffett likes it thanks it can beat the s&p over time. it hasn't for the last ten years. but for the next five or ten years whether he's there or not is quite the prediction. jack: one other thought todd combs, what has he been adding to the portfolio? for conference that should he run the conglomerate he will make good purchases? >> i think he knows a lot about it we don't know what he owns because buffett doesn't disclose that. but is close to many financial companies he's on the board of j.p. morgan, is very well thought of a j.p. morgan. that adds to his allure as the brookshire who to replace buffett with. be nineeeee as a struggling actor, i need all the breaks that i can get. at liberty butchumal- cut. liberty biberty- cut. we'll dub it. liberty mutual customizes your car insurance so you only pay for what you need.
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jack: jack and this week streetwise calm you right that you're waiting for bitcoin to go full tesla. when you talk much? >> it's that $10000 it's up from $4000 bitcoin a year. it's up from 4,010,000 and i had two questions about that why is it not yet hitting a new high of 20000 and why is it not worth zero? those are what explore in the column. new high because first of i look at is kind of a proxy for nonsense and it breaks very low and scarce. i thought it would be further along, also there's something coming up for bitcoin it happens about every four years it's a reward for minding these on computers that drop by half. some people call that that having people caught the happening, i like having because it sounds more like dungeons & dragons and i secretly suspect all crypto currency is an elaborate game of dungeons & dragons anyhow.
but in the past that pretended to proceed a rapid price and the christ. jack: when he hits that pecan stars to set off, look for other risk assets. >> if you want to melt up now, say not until bitcoin goes full tesla. jack: thinking of tesla we go from elon musk to marijuana. >> it's a lot of investors that are looking to get into the cannabis industry. it's a very risky industry baby absolute feel you must, bear in system analysis looks at a good cash position and green thumb industry topped our list as that. it has more cash on hand, again we would caution it's a really risky industry. a lot of regulatory headwinds coming up. jack: speaking of risk real quick what you pick? >> so coronavirus is still rolling markets, still a big issue. our capita said something very smart take a look at some chinese stocks that you really like, high-quality stocks, that could be hit and effective. if they get here price target, carnival pacitti combined them.
i really like allie baba. jack: our great, great ideas everybody to read more check out this week's edition that barron's.com, deborah tells an twitter at barron's online, that's all first countable seated next week on barron's a wonderful valentine's day, have a wonderful weekend everyone. i will see you back. maria's next. maria: and happy weekend everyone welcome to the program that analyzes the link that wasn't helps position you for the week ahead. i am maria bartiromo and coming up in a few moments my one-on-one with national economic counselor director larry cardwell and what he calls tax cuts to point out coming for a buffers and joining me to it talk about the broader environment in terms of investing today is the founder peter anderson is here. great to see peter thank you for joining us. so your take on where we are
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