Value Investor Daily #1

Apple Is Going to $4 Trillion, 2024 Market Outlook & Picks, and Buffett's Racetrack Method Still Finds Great Ideas

In Today's Edition:

Dan Ives Predicts Apple $4 Trillion Market Cap

Wedbush Securities analyst Dan Ives predicts Apple will be the first company to reach a $4 trillion market cap by the end of 2024.

Ives cited Apple’s growth, monetization, and increasing demand in China, as factors contributing to the projection.

Despite this optimistic outlook, Apple's shares fell almost 1% on Monday. Ives also predicted that Apple's services business will be worth $1.5 trillion to $1.6 trillion as the market enters a new tech bull run.

Adobe Cancels $20 Billion Figma Deal

Adobe has terminated its proposed $20 billion deal to acquire Figma, a collaborative design platform, due to regulatory hurdles.

The deal was expected to strengthen Adobe's presence in the design software market and expand its capabilities in cloud collaboration.

Figma's CEO, Dylan Field, expressed disappointment over the termination but remains confident in the platform's growth and ability to serve the design community.

The news of the failed merger could put a damper on M&A valuations in the tech space in the near term, as buyers may not want to face the heavy legal scrutiny to complete acquisitions.

Patent Dispute Forces Stop of Apple Watch Sales

Shares of Apple fell by nearly 1% after the company announced that it will halt sales of the Apple Watch Series 9 and Apple Watch Ultra 2 due to a patent dispute with medical device maker Masimo.

The International Trade Commission granted Masimo cease-and-desist and limited exclusion orders to prevent Apple from selling the watches in the US.

If the White House does not intervene before the review period ends on December 25, Apple will pull the watches to comply with the orders. The ban only applies to watches sold directly through Apple.

This Week’s Earnings Calendar

Earnings we’ll be watching this week include:

It’s that time of year again—next year's market predictions and stock picks for the year ahead.

Barron’s is optimistic about the market's performance in 2024, predicting continued growth, despite potential volatility. Experts believe that stocks will have another strong year, with a broader rally expected to include a wider range of stocks beyond “The Magnificent Seven”.

The S&P 500 index rose 23% YTD in 2023 and the Nasdaq Composite increased by 41%, driven by a strong economy, AI advancements in tech, and the prospect of interest-rate cuts next year.

The bond market also showed signs of promise, even amid uncertain timing and pace for rate cuts.

Morningstar has compiled a list of the 10 best value stocks to buy for the long-term.

The stocks were chosen based on their inclusion in the value portion of the Morningstar Style Box, their presence on Morningstar's list of the Best Companies to Own, and their trading below Morningstar's fair value estimates.

The list includes stocks from various sectors, such as Pfizer, British American Tobacco, Comcast, and Campbell Soup. Morningstar recommends an overweight position in the value category, as growth stocks are trading at a slight premium.

Pabrai: How Buffett Still Finds Hidden Gems

You’ll love this Q&A fund manager, Mohnish Pabrai, did with students at Boston College.

He details how Buffett still finds deals to this day, including his recent masterstroke investment in the Japanese trading houses—the same way he did as a teenager on the racetrack in Omaha

Buffett's Bribery Claims Denied by Court

A judge has ruled that Warren Buffett's Berkshire Hathaway cannot use allegations of bribery against truck-stop billionaire Jimmy Haslam in court. The ruling came in a lawsuit filed by Pilot Corp.

The company claimed that Berkshire Hathaway, which holds 80% of Pilot Travel Centers, has used accounting changes to artificially deflate the price it would have to pay for the Haslam family's remaining 20% stake in the truck-stop chain.

Berkshire Hathaway responded to the lawsuit with the bribery allegations, claiming that Haslam tried to inflate the company's profits to increase the price it would have to pay.

Barron's 2024 Picks: Alibaba, Berkshire, and More

Barron's has released its annual list of 10 undervalued stocks. 2024’s list includes companies like as Alibaba, Barrick Gold, and Hertz Global.

The picks for 2023 outperformed the market, returning an average of 31% compared to 24.5% for the S&P 500. The picks had a value bias, with home builder Toll Brothers being the biggest winner and aluminum miner Alcoa being the biggest loser.

Pabrai's Investment in AMR Pays Off Handsomely

Renowned value investor Mohnish Pabrai made a significant investment in Alpha Metallurgical Resources (AMR) earlier this year, and his bet has paid off handsomely. The stock has risen substantially, driven by improving financials and a large share repurchase program.

Pabrai's fund has likely had a phenomenal third quarter as a result of his investment. The rise in AMR's stock price has been impressive, increasing 437% in 2021, 150% in 2022, and another 132% so far in 2023.

The company predominantly produces metallurgical coal, which has seen a rising price due to increasing demand and stricter environmental regulations. Additionally, AMR's balance sheet has improved significantly, with a substantial decrease in debt and a massive share buyback program.

Pabrai recognized the hidden value in AMR and made a very smart investment.

S&P 500 Stocks YTD Performance

Chart of the Day

Santa Claus Rally Setting Up?

Stocks were up .45% yesterday. ‘Tis the season for end-of-year gains? Will investors get a Santa Claus rally next week?

Either way, it’s been a very strong year in the markets, Merry Christmas Investors!

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Thanks for reading, happy investing!