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Filtronic Expands Hybrid Microelectronics Manufacturing Facility With $1.3 Million Equipment Investment – Business Wire

Posted: December 2, 2019 at 11:46 pm


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SEDGEFIELD, England--(BUSINESS WIRE)--Filtronic, the designer and manufacturer of antennas, filters and mmWave products for the wireless telecoms and critical communications markets, today announced that it has invested over US $1.3 million in new equipment for its manufacturing facility in Sedgefield, UK. The expansion will enable Filtronic to significantly increase capacity to meet a growing demand for both its highly-integrated E-band transceiver modules for mobile telecoms backhaul infrastructure and its precision hybrid microelectronics assembly and test services, including mmWave device packaging and sub-assembly manufacturing.

The new equipment includes automated pick-and-place and wire-bonding machines to augment Filtronics existing assembly and production lines, which already have a reputation for product quality and reliability.

5G backhaul network deployments are now driving a significant increase in demand for our E-band transceiver modules and a growing demand for microelectronics assembly services, in particular at microwave and mmWave frequencies, said Reg Gott, Executive Chairman of Filtronic. In addition to being able to produce high volumes of our own mmWave transceiver modules and filter products, the quality of our microelectronics assembly line and test capability is attracting an increasing level of business for our custom design and manufacturing services. As a result, we are also increasing our workforce to cope with this demand.

Filtronics hybrid microelectronics assembly and test offering includes: low-void die attach and precision component placement; fully-automated wire bonding with deep-access multi-level capability; hermetic sealing; and automated test to 90GHz and above. Proprietary air cavity packages can include mixed GaAs, GaN and Si die within a single package, and are capable of performing at frequencies higher than 90GHz.

The precision hybrid microelectronics assembly facility has received significant positive feedback from its customers, including a major European defence manufacturer who singled out Filtronics manufacturing expertise for a special commendation. The award cites Filtronics effort and commitment in successfully delivering a large production run of transmit/receive modules as providing an outstanding contribution to its state-of-the-art radar system.

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Web: http://www.filtronic.com

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Filtronic Expands Hybrid Microelectronics Manufacturing Facility With $1.3 Million Equipment Investment - Business Wire

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December 2nd, 2019 at 11:46 pm

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Why Jeans Are a Good Investment – The Motley Fool

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In this week's episode of Industry Focus: Consumer Goods, the Fool's Nick Sciple and Asit Sharma dive into the world of denim companies, especially Levi's(NYSE:LEVI), Kontoor Brands(NYSE:KTB), and (soon-to-be-public) Madewell.

Learn why jeans are a more appealing investment than any old fashion retailer, how these three companies stand out, what makes each unique, what investors should know about Madewell's ESG efforts, how athleisure could affect demand for denim, and much more.

To catch full episodes of all The Motley Fool's free podcasts, check out ourpodcast center. To get started investing, check out ourquick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Nov. 26, 2019.

Nick Sciple: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. Today is Tuesday, November 26th, and we're talking jeans. I'm your host, Nick Sciple, and today I'm joined by Motley Fool contributor Asit Sharma via Skype. How's it going, Asit?

Asit Sharma: Well, it's going very well. Very excited to talk denim with you today, Nick.

Sciple: For listeners to note, we're pre-recording this episode on October 29th. Some facts may have changed between now and then. But, yeah, really excited to talk about denim and jeans. When you think about fashion, there's not a lot of articles of clothing or pieces of fashion that have the staying power that jeans have. And in the past year, they've really picked up some attention of Wall Street.

Jeans were invented in the 1870s by Levi Strauss and Jacob W Davis. Since then, as I said, they've become a fixture in American fashion, really ramping up in popularity in the 1950s after James Dean wore them in Rebel Without a Cause. But they aren't just fashion, they're big business. As I mentioned, over the past year, they've really caught Wall Street's eye. Levi Strauss IPO'd earlier this year. We've seen spinoffs of Kontoor Brands, who's the maker of Wrangler and Lee jeans, away from VF Corp. And, we've seen a spinoff of Madewell, from J. Crew. Asit, just off the top, why is there all this interest from Wall Street in jeans all of a sudden?

Sharma: [laughs]It's an intriguing question, isn't it? As the market has gradually crested ever since the Great Recession, the IPO market has become more and more intense. You see these very valuable unicorns, private companies with billion-dollar valuations, going public, and some of them doing quite well. Why are Wall Street investors still interested in jeans? There are a few reasons.

One is, these companies have extremely dependable growth. You mentioned Levi Strauss. That company has been around, as you said, I think it started in the 1850s. Jeans were only invented 20 years later. This is a recurring revenue stream, and Wall Street loves nothing more than recurring revenue streams. Think about software-as-a-service stocks, those are really hot now. Those are essentially the same things. They're selling the same products over and over again, and people are reupping every year, those software subscriptions. This is that but in denim.

Also, these companies, Levi's and Kontoor Brands, the first two that we'll talk about today, they throw off a pretty interesting dividend, a lucrative dividend, each of them. We'll get into the specifics a bit later.

The third thing that I wanted to mention is that if you are an IPO investor, let's say you're a hedge fund or a pension fund or a retail investor, you've seen in the last year that for every hot issue, there's an issue that inevitably burns a hole through your pocket. Look at Uber, look at WeWork, which actually pulled its IPO because it couldn't come to market, so Uber might be the more specific and better example. But, for every unicorn that does well, you're rolling the dice as to whether these companies with their new business models will make money. This is a great way, if you invest regularly in IPOs, to hedge those bets and put money in an issue that might not storm out of the gate, but over the years will return you a handsome bit of money.

The last thing I want to mention is, we rarely get a chance to invest in iconic brands in the consumer goods world. Between these first two companies that we're talking about, Levi's and Kontoor Brands, you've got the Levi's brand, you've got Dockers, you've got Lee jeans, you've got Wrangler. These are brands that have been around for decades, much beloved, extremely strong, great customer loyalty. We look for that in the IPO market. "Hey, what is this company bringing in terms of brand potential and brand value?" When you get a chance to put some money behind these in the public sphere, that's a very persuasive reason to invest.

Sciple: Yeah. As we mentioned, it's very rare you see a brand that has the type of staying power that Levi's had. When we were doing some preparation for this show, you compared it to Coke a little bit in that both of these companies have been around since the late 1800s. Both of these companies are in a market that has been durable since that entire period of time, and have had steady above-GDP growth that has been able to continue over time, which is one of the things that we mentioned is really attractive to Wall Street, is this annuity-like business model that's durable over time. Do you want to break that down a little bit, Asit?

Sharma: Sure. When Kontoor Brands actually made its registration statement, provided details before it spun off from VF Corp, which holds brands like Timberlake and Vans shoes, we got some good data on their management's estimate of the market. Per their estimate, jeans is a $100 billion market globally. This company itself holds about a 3% market share. The interesting thing is that Kontoor Brands sees that this market has been growing steadily at a compounded annual growth rate, or CAGR, for about 4% for the longest time, and it's projected to speed up a little bit over the next few years to a 5% CAGR.

Nick, as were batting around this topic, you pointed out that that actually exceeds, if you look at global gross domestic product or GDP growth over time, that's somewhere around 2%, 3% at best. So, you have an industry here which is steadily growing in excess of 2% to 3% of gross domestic product a year. What that means is that it's staying slightly ahead. Consumers have that much more to spend, and they consistently buy these products.

Again, what does Wall Street love? They love an annuity business, a business that you can depend on those returns every year, year in and year out. A lot of the sophisticated valuation models behind stocks that we love, be it Amazon, Microsoft, in the consumer goods sphere, I'll throw out McDonald's in addition to Coke, most of the big institutions that keep pouring money into these stocks are thinking about future cash flows and discounting them back to present value. Wall Street loves nothing more than a company in which you can predict the certainty of those cash flows going forward. And that's one of the things that's so interesting to me.

Just to talk a little bit more about these first two companies, Kontoor Brands and Levi's. Kontoor Brands has roughly 3% market share, close to $100 billion. It has got about $2.7 billion in annual sales. Extrapolating those numbers to Levi's and its own revenues, which are about $5.6 billion a year, it's got 5% market share. That's not a lot. I know you add that up, it's 8% of the total global market, and yes, these two companies are dominant. But they've got a long runway to actually grab even more market share.

Briefly, Madewell, which has put out for a spinoff from its parent company, which is J.Crew, this company, the total company has $2.4 billion in annual revenue. Madewell itself has about $615 million in annual revenue. So, it's much smaller than either of these other two companies. By that criterion, it's got about six-tenths of 1% of total global market share, and it also has a very long runway to grow.

Sciple: Another thing on the jeans growing faster than GDP, I think they stand out as a piece of apparel relative to the rest of the market. There just aren't that many fashion trends that persist over the better part of a century. The market really likes predictability, as you mentioned, in these annuity-type businesses. When you have a track record of in excess of GDP growth over decades and decades that you can extrapolate into the future, in addition to a very strong brand like Levi's -- or, as we mentioned, Wrangler and Lee -- there's a lot of opportunities there.

You mentioned Madewell. That's a little bit of a different animal there. A lot faster revenue growth, a lot younger company. Actually has a little bit higher profit margin, a 10% net profit margin. Around the mid 6% for the other two. And their model is much more growth-focused versus those dividend models of those other companies. Actually, they're less jeans-focused than the other companies as well. A little over half of their revenue is attributable to items like T-shirts, footwear, leather goods, quote-unquote "everything you wear with jeans" is what they describe that as.

One other place where Madewell has differentiated from Kontoor Brands and Levi's is in its distribution model. A lot of folks, when they think about buying Levi's or buying Wranglers, they think about going to your local Macy's or JC Penney to buy these products. There is some concern about those slowing down. Well, Madewell as a younger, newer, more millennial-focused brand has this much more direct-to-consumer focus. We've seen the perfect example of that recently has been Warby Parker, a company that really is focused on direct-to-consumer, being able to build out from there. 87% of Madewell's wells sales are direct-to-consumer, and 40% of their sales are e-commerce. So really, a different approach from those other guys. Asit, can you talk about what advantages that direct-to-consumer model gives to Madewell, and what flexibility maybe it gives to the company?

Sharma: Yeah. If you think about how Levi's, and also Kontoor Brands, their big brands being Lee and Wrangler, how they've grown, they've grown through the mass market over decades. This is from the time that malls were big in American culture. You'd go to the mall and buy your jeans. Still, they have a wide what we call wholesale presence. Wholesale really means they are selling their jeans through retail channels. When you hear us say wholesale, we're really talking about, at the end of the day, those jeans are being sold in someone else's shop. That is a tough model over time as the retail landscape evolves. Listeners, you've heard us talk umpteen times on this show about how malls are dying, out the retail landscape is changing. The advantage you have in a direct-to-consumer channel, and what this means for Madewell, it's got about 135 stores. That's a rough number. Nick, maybe you can correct me a little later. But let's say it's close enough for jazz. With these stores and with its e-commerce sales, as Nick told you, they reach most -- this year, I think they're tracking closer to 90% -- of their sales through these direct channels. What advantage that gives them is, it's a tremendous builder of loyalty. When a customer is coming directly into your store, or they're buying online from you, you have a great opportunity to enroll them in your loyalty program. About 60% of the direct sales that Madewell generates end up snagging loyalty customers. These customers are responsible for about 67% eventually of all direct channel sales. So, people who visit a store or buy online one time, about two-thirds of those are buying again, and signing up for the loyalty program. So, you really can capture that customer.

Versus Levi's which, although it's a hugely strong brand presence, it still does compete on price. This is anecdotal, but for me, when I was a kid in the 70s, I don't want to say what part of the 70s because that'll maybe age me too much, [laughs] but, you had to come to school in Levi's jeans. Wrangler was the off-brand. Nick, were talking yesterday -- Wrangler, by the time you were in school, I think was a little cooler. But, there were times where my mom would take me to the mall, and she'd be like, "We can't afford all Levi's this year. This other brand is on sale, I'm going to buy some of that." So, when you are not in a preponderance of direct channels, you are vulnerable to this type of pricing. So, that's the main thing that you get out of this.

I would also say that this millennial-friendly aspect of Madewell that Nick talks about, it's a very persuasive way to go about the business, and it's led to this very fast revenue growth. They have a design team which actually crowd-sources some of the designs, with about 4,000 customers who have done 125,000 product reviews. So, it's a very hip and online brand, both in the way that they sell and in the way that they interact with their customers.

Sciple: Yeah. Madewell, very controlled distribution with that 130-some stores. You compare that to Levi's, their products are in 50,000 retail locations, 3,000 dedicated stores and shops-within-shops. So, obviously, much more exposure to the broad retail market. The result of that, their Americas revenue declined 3% in this most recent quarter. Levi's management has called it quote-unquote "a melting iceberg." So, it's a big market, but slowly, over time, this business is slowing down a little bit, at least in the U.S. We'll talk about international maybe a little bit later, and what opportunities there might be there. Also, one other thing to mention with Levi's too is that it's a little bit more of a premium product in the jeans market, so maybe a little bit more exposed to the department store market.

But, as a result of some of these concerns with their traditional distribution outlets, we've seen both Levi's, and to a lesser extent Kontoor Brands, try to push into the direct-to-consumer market as well. 35% of Levi's sales are direct-to-consumer. Kontoor Brands, 11%. Can you talk a little bit about what Levi's and Kontoor Brands are trying to do to build out this direct-to-consumer model, and what opportunities it gives to them as retail is changing?

Sharma: So, for Levi's, it's more of a process of building out their own branded stores. These are mostly the shops-within-shops that you mentioned. When they do that, obviously, it's more like the Madewell model, where they have a chance to interact on a closer basis with the consumer.

For Kontoor Brands, it's interesting. As you mentioned, they only have 11% direct-to-consumer sales, and they don't have a retail presence of their own. Now, this company happens to be headquartered in Greensboro, North Carolina, which is a stone's throw from where I live in Raleigh. They're testing out a prototype retail store in Greensboro, near their headquarters. I wouldn't be surprised to see them roll out more of this in the future. With their very well-known brands, they certainly have an opportunity in more affluent markets, in outdoor retail centers that are becoming very popular. They have an opportunity to exploit that.

I also think that, as they expand geographically, which is the second way to counter this type of U.S. mall-based declining sales quandary, that Kontoor Brands has a huge opportunity to not only expand its direct business, but in general to grow into a new business. The parent VF Corp never really helped this company grow to its full potential. That's not the fault of VF Corp, because they have a gazillion brands. But when you're under a centralized control, you only have so many resources that you can use to further your own growth. One of the markets, of course, they're looking at is China. I was pretty surprised to learn that Kontoor Brands had never been sold in China. Now that they've spun off in May from VF Corp, they will have that Wrangler brand in China in early 2020, they're shooting for January, which is both an indirect and a direct e-commerce opportunity for them. So, lots of potential there for both companies to wend away from the small base decline. Again, it's more e-commerce and it's also geographical expansion, because outside of the U.S., developing countries, malls are all the rage, and that's actually a place you want to be selling within.

Sciple: You mentioned how Kontoor Brands' management has called out that they felt hamstrung by the relationship with the VF Corp, held back their ability to invest in product innovation as well as international expansion. You mentioned pushing into China. When you look at the opportunities outside of the U.S. for these companies, Madewell doesn't have much of a presence there, but they mentioned a number of times throughout their S-1 that they would like to continue to expand more internationally. When you look at the opportunity for these companies to expand overseas, and just the way jeans resonate outside of the U.S., how big of an opportunity is this for these companies?

Sharma: It's tremendous. Kontoor Brands is interesting because it's actually got a supply chain that stretches across North America into Mexico. When we think about overseas for Kontoor Brands, that might mean also expanding southward to a very big market -- let's talk about Coca-Cola again. It's a counterintuitive idea, but Coke has a big customer in Mexico, in the Mexican consumer, and has spent a lot of resources over decades. And it's worked out for them because their costs to supply to Mexico are a lot cheaper than supplying overseas. Of course, they've built over time their distribution within these markets. But the same principle can apply to Kontoor Brands. I think that for them, that's a tremendous opportunity.

Their global exposure is just 22% right now. Obviously, the opportunity for them is probably greater than it is for Levi's. Levi's has about 55% of revenue in the U.S., 29% in Europe and 16% in Asia. For those of you who are not geographically challenged like me, you'll notice, what about the Middle East and Africa? Levi's includes those two big geographical regions within its Asia count. So, 16% is actually a greenfield for them to plow in the future. With developing economies, not just in China, but if you look at, economies such as Indonesia, Vietnam, Japan; looking in Africa, South Africa, Kenya; and moving on into the Middle East, those are very wealthy economies -- they have a lot of ground, as I talked about at the outset of the show, to capture another few percentage points of market share. For Levi's, what does another 1% of market share mean? It means about $1 billion of revenue each year.

One thing that, Nick, you were talking about yesterday when we were kicking around our preparation for this show, is that the company's seen global direct-to-consumer growth that's hit the double-digits for a while. So, not only is Levi's expanding outside the U.S., but it's doing it more in the direct channel. That channel is growing faster than the overall business. So, you get a two-for-one there in Levi's potential.

Sciple: We've mentioned that America's revenue was slowing slightly, but when you look at overseas, Europe growing double-digit rate, Asia near a double-digit rate, you mentioned the direct-to-consumer market growing -- appears to be a strong opportunity for them there. And, an opportunity to push that direct channel, higher-margin business as well.

Another opportunity for these companies to take share and to grow their business is to push out to new customers. For Levi and Kontoor Brands, I think that means expanding more into the female channel. Madewell, the other way, they need to push into men's products. When it comes to Levi's, what moves are they making to try to attract more women to their brand and to expand their market in that fashion?

Sharma: So, Levi's is doing two things. One, they are emphasizing that they've got a core discipline in menswear. It's sort of like owing both your strength and your vulnerability. Menswear and men's bottoms each account for 60% of revenues. So, while Levi's doesn't disclose what that final number is, that is, how much are men's jeans the real driver of the business, you can cross-section those two numbers and see it's a pretty big percentage. So, they're emphasizing women's fashions. That actually moves into accessories. Not to say that men don't have as great fashion sense as women, but we don't tend to accessorize at the pace that women do. Levi's has been very savvy in growing that.

Also, they have moved one other area to diversify away from this men's jeans core of their business -- to look at tops as being a slice of their market. They are heavy into T-shirts, jackets with different substrates, different cloths. They're also cyclically pushing the jean jacket. I wanted to stop right here and ask you, Nick, have you ever owned a jean jacket in your life before? My personal theory is, they come way into fashion, and then you wouldn't want to be seen dead with one.

Sciple: Yes, I have owned a jean jacket, maybe middle school days. I never got into the full-on hipster thing. If I was leaning into the hipster culture, that's more of the jean jacket scene these days. What about you, Asit? When's the last time you put one of those on?

Sharma: When I was a teenager. Again, I won't tell what part of the 80s, but in the 80s, my sister bought me a jean jacket. I was recently talking on this show about my sister being a fashion maven and myself not having much of a sense of fashion. So, she got me a jean jacket, and she's like, "You have to wear this every day." And I think it might have been 10 years later, I met up with her. We both moved to different cities. And I was wearing that jacket, and she was like, "What are you wearing?!" [laughs] I said, "You bought this for me! Doesn't this look great?" No. It was much out of fashion.

I think Levi's is aware that the jean jacket is a tremendous seller, and it's a lead-in for other articles of clothing. But if they had their druthers, and if Kontoor Brands had its druthers, the denim jacket would be in fashion all the time. But, what a great piece of wear when it's hot, and something you wouldn't be caught dead in when it's not.

Sciple: Exactly. Just to throw a couple numbers at you, Levi's called out 17 consecutive quarters of expansion in women's clothing, 11 consecutive quarters of double-digit growth in women's lines. Compare Levi's having a very nice 69% of their revenue coming from bottoms, to Madewell. As we mentioned earlier, 52% of their revenue coming from tops, T-shirts and those sorts of things. Maybe draws the line into that gender dynamic between those companies. Obviously a big opportunity there for Levi's.

Kontoor Brands also doing some product innovation there when it comes to women's products. They've announced this Lee jeans Body Optix line which uses materials research, imaging technology, and insights from cognitive science to use fabrics that are more visually appealing and attractive for wearers. That's a really big opportunity for both of these companies.

Another area that a couple of these companies are pushing into is this ESG, recycling, taking care of the environment push. Madewell in particular has touted that at the very front page of their S-1. They tout 600,000 jeans recycled turned into 100 million square feet of housing insulation. Asit, with these companies pushing toward this ESG, sustainability type focus, what opportunity does that create to drive customers, particularly the younger generation, to their brand?

Sharma: It's a double-edged sword. I used to think that, "Hey, it's wide open opportunity," but there's a cost to every initiative that you undertake. We don't always understand the economics. I'll give you one example. Kontoor Brands has developed a really cool, innovative strategy for their jeans in that they're using foam now as a dye instead of using a water-based dye. That saves them a tremendous amount of waste. It uses zero water and it's supposed to reduce waste by 60%. But we really don't see those play out in the financials until years have passed. But these companies are erring on the side of the younger consumer, that this is extremely important to building lifetime value of a customer who's maybe in their 20s, is a socially conscious millennial, maybe versus a baby boomer. Not to say that baby boomers aren't sustainably oriented and environmentally conscious. But, as a spectrum of consumer, they've been shown in studies to be a little less concerned about the provenance of the items that they use, and a little bit less attuned to these socially conscious issues. So, long term, it's a win. It's a win for the environment. It's a win for these companies, in the sense that if they pick up a customer in their 20s and prove to them that the customer can feel good about buying the product, they'll have that customer for decades. And it's a win for their bottom line eventually. But I think from now on, when we talk about ESG issues with consumer goods companies, we should recognize that there's a near-term cost. Anytime that you adjust a supply chain to make it more sustainable, there's a near-term cost on the financials.

Now, this is just a personal preference. I'm all for that. I don't mind if a company that I invest in takes near-term hits in terms of gross margin or ultimate profit margin, if I know that eventually, they're going to do better by the environment. I'm, maybe, a little bit on the more sustainable part of the spectrum in terms of where I've evolved. However, I'm also business person, and I hope to be over time a savvy investor. I'm still on that journey. I want a company to be able to do that in a fashion that also is easy on the bottom line. There is a trade-off there. I want to give more of an honest answer than what used to be an enthusiastic response to a question like that, Nick, which was like, "Yeah, it's great on all fronts!" Everything has a cost. But I think in the end, these companies will win by grabbing consumers for a long, long time.

Sciple: Sure. Linking the sustainability to driving sales, I think Madewell has an interesting approach there. Only 12% of their denim sales to shoppers are through their recycling program. But, if you do participate in their recycling program, they'll give customers a $20 discount on a new pair of jeans when they recycle a used pair. You can see psychologically, you feel way better about yourself going to buy new clothes, even if they're expensive clothes, if you can say, "Hey, I'm taking care of the environment by recycling my old clothes. Plus, I get a $20 discount." You can see how that could maybe build a little bit of loyalty, as well as maybe drive more trips to the store than may have happened otherwise.

The last thing I want to talk about here when it comes to jeans. This is more an assessment of the broader market. I talked about off the top of the show, what's been really remarkable about jeans as a fashion item is that they've been able to persist over a number of decades, and really be a staple of what people wear. We're seeing in recent years this rise of this athleisure trend. Really started a few years ago, when yoga pants started becoming a phenomenon. I remember when I was in college, you first started to see them pop up, and then it went from the college-aged folks all the way up to the grandmas and the mamas and all that stuff. Now it's just a phenomenon. Lululemon, this company that maybe nobody had ever heard of a decade ago, now a massive player in consumer goods. But, with this growth of athleisure, do you think there's any risk that as more athleisure clothing becomes part of our day-to-day wear, maybe some market share could be taken away from jeans, and that in-excess-of-GDP growth may come back toward GDP?

Sharma: There's some risk in it. Just some thumbnail numbers. It's really hard to get a sense of how big the athleisure market is. I've seen estimates that peg it at $83 billion annually to $200 billion annually. By some estimates, it's a little bit smaller than the jeans market. By some estimates, it's twice as big. But you have to remember that also includes things like socks and sports bras and accessories that go with this whole athleisure concept. It's not just leggings and yoga pants, which are the primary competitors to bottoms in the denim market, i.e. jeans. So, there is a potential for this to shave a few points off of the market for jeans.

I personally think that the two can coexist. If the athleisure market continues to grow -- and some estimates, actually, a firm I respect called TechNavio, they peg that this market is going to grow at a 7% CAGR. We talked about the jeans market speeding up to a 5% compounded annual growth rate. This is 2% points above that, for the next five years, is what TechNavio estimates. If it does continue to grow like this, sure, it's going to shave some of the top of the market off for jeans.

But, jeans have never really been a workplace-wear. Athleisure has some potential to go and replace some workplace-wear. I think jeans have always been more school-wear and also evening wear. So, when you're going out with friends or you're relaxing at home, or just being yourself, you're going to throw on a pair of jeans.

Plus, this thing that I've personally witnessed in my travels to different parts of the world -- jeans are aspirational. In developing economies, the uniform of the middle class is a pair of jeans and a branded shirt, whether that has a European logo on it; most the time, it's got an American logo on it. I don't know, off the top of my head, Polo, Ralph Lauren. That is sort of a uniform all around the world that says, "Hey, I've made it. I'm no longer in the lowest socioeconomic rung. I've climbed up to this other wrung here." So, I think jeans will continue outside of the U.S. to play this role in people's fashion choices.

Now, in the U.S., I think that's where we may see a little more deterioration in jean sales. Maybe, Nick, that's why we see the wholesale channel in the U.S. suffering a bit. Maybe it's not just the malls and the death of malls that are causing Kontoor Brands and Levi's to see a little bit of loss of business, but it's this creeping growth and popularity of athleisure. Now, having said that, a lot of the athleisure trend is confined to women. Men as yet aren't going en masse in yoga pants outside, but they could potentially in the future. I'll get your opinion that.

So, bottom line on your question, yeah, I think that the ultimate market in jeans may be a bit compromised, but I don't see this athleisure trend wiping out jeans. I think the two will continue to coexist in people's closets.

Sciple: Yeah, Asit, I tend to agree with you. I don't know that yoga pants will be adopted by the male demographic, but I think some level of athleisure is going to, and is already beginning to, penetrate the male side of the market as well.

You mentioned the workplace. I think that's a really important thing to call out. We've seen a push across the board at many workplaces to move toward more casual wear. I know we're a very casual workplace here at The Fool. We see folks wearing jeans to work all the time. I think the segment of the market that is really at risk relative to athleisure, and maybe even relative to jeans as well, is the formalwear side of the market -- the that JoS. A. Banks, those sorts of things. I think in 20 years from now, there'll be a lot fewer people wearing a suit and tie to work than there are today. And I think that opens up market share not only for athleisure, but for Levi's and all these other denim brands as well. These are casual clothing that folks are really comfortable wearing on their day-to-day, going out and about, eveningwear, as you mentioned, Asit. So, I do think there's some chance that athleisure maybe tempers the growth of jeans, but I think the real loser here is formalwear.

So, last question, just going away. When you look at these three companies -- Levi's, Kontoor Brands, and Madewell -- which one are you most excited about as an investor?

Sharma: I'm most excited about Kontoor Brands. I told you I would talk about dividends. Really briefly, Kontoor Brands, when it gave its pitch to investors, actually came out and said, "We're going to grow our annual revenue 1% to 2% a year." That's not a lot, but they also said, "We're going to throw out a dividend which will yield 5%." I actually wrote an article some time ago, during the summer. The company's stock fell down to $27 bucks a share. It opened closer to $39 when it spun off in May of this year. And I wrote an article saying, "Hey, you can pick this stock up today and get somewhere between a 7% of 10% yield on cost if you purchase the shares." They've come back up to that $39 level.

But I'm very intrigued. I'm a dividend investor. For those of you out there who are seeking a stable source of income in a not-hypercharged selling environment, this is a very interesting company. Again, they really never had the chance on their own to see, what can we do with these brands? They were always under that VF Corp umbrella.

Having said that, I'm intrigued by Levi's. You know that Levi's is going to be around a lot longer than you or I will be. [laughs]Levi's jeans as a brand is going to be here likely another hundred years. They have a dividend which they just raised, which is now yielding 3.5%. If you're a dividend investor, maybe you split it between these two companies.

But, props to Madewell, because it is a niche company. Again, it's a fraction of the size of either the first two, but they've got a handle on this millennial consumer. They are going to grow at a lot faster pace. They'll be a little bit higher risk. But you can't ignore that one, either.

I don't want to make it seem that I don't like Levi's as an investment or I don't think that Madewell is going to be interesting. We'll have to see it go public actually, and see a few quarters of performance and analyze those financials. But it's an intriguing aspect.

But, for my money today, as a dividend investor -- and I encourage listeners who are income-seeking investors, check out Kontoor Brands. And you, Nick, I'm very curious where you land on these three companies.

Sciple: For me, it's going to be Levi's. Just the power of the brand, the staying power. It's a brand that's recognized the word over. When I think of prestige relative to Wrangler and Lee, it's just a little bit of a notch above. We talked about when we were preparing for this show, I said Levi's 1A, Wrangler and Lee 1B, the Kontoor Brands brands. Again, I really respect what Madewell has done. Their growth has been really impressive. Maybe it's my bias, because I'm not super familiar with the brand, and I've never purchased anything from them, but I have a perception -- maybe this is an unfair perception -- that they may be a little bit more sensitive to fluctuations in what's fashionable from time to time. I like that Levi's has this multidecade track record of being that 1A in the jeans market. I think they can persist over time. Really like that dividend, though, from Kontoor Brands, Asit.

Sharma: Absolutely.

Sciple: Asit, always enjoy having you on the show. Look forward to having you on again sometime soon. Thanks as always for coming on!

Sharma: It's been a pleasure. Appreciate it.

Sciple: As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for his work behind the glass. For Asit Sharma, I'm Nick Sciple, thanks for listening and Fool on!

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Eight trends point to what we think is a modestly bullish outlook for stocks.

By Anne Kates Smith, Executive Editor November 27, 2019 From Kiplingers Personal Finance

Every bull market has its quirks, but this one, in its old age, has developed a split personality. After a near-death experience at the end of 2018, the bull recovered in 2019 and the stock market hit new highs, returning an incredible 23% by the end of October, as measured by Standard & Poors 500-stock index.

And yet, this is no charging bull. Its more like a Ferdinand, the old childrens book character who refuses to fight. Whats so strange is that the march to record highs has been led by investments favored by the timidbig, U.S. blue chips, low-volatility stocks and defensive sectors more in demand during bear markets than in powerful upturns. Money flowing out of stock funds has belied the index gains. We have a 20% run in the stock market led by all the bearish assets, says Jim Paulsen, chief investment strategist at the Leuthold Group. All this reflects the weirdness of this recovery, he says. Its truly a bull market led by bears.

We think the bull can manage a more modest run in 2020, with a good chance that market leadership will come from sectors more traditionally, well, bullish. The familiar litany of risks hasnt disappeared. But rather than obsessing about lurking bears and an imminent recession (at least for a while), it will make sense to mix a little offense with the defense in your portfolio. For some ideas on what to do with your money now, read about the trends we think will shape the market in 2020. Prices and other data are as of October 31.

The stock market has defied the odds by continuing to rise well into its 11th year, despite softening earnings growth, recession fears and a huge cloud of tariff-induced uncertainty. Some of those odds will shift a bit more in the bulls favor in 2020 as central bank stimulus works through the economy, earnings growth picks up, and investors regain an appetite for risk while at least a partial trade deal with China seems doable.

To be clear, were not saying to go all-in on stocks at this late stage in the economic recovery and the bull market. Paulsen thinks an appropriate portfolio weighting now might be about halfway between whatever your maximum exposure is and your average stock exposure. And this is no time for complacency, says Terri Spath, chief investment officer at Sierra Funds. You have to be tactical and have a plan for how youre going to manage volatility, she says.

It seems reasonable to expect the S&P 500 to reach a level somewhere between 3200 and 3300 in 2020. The conservative, low end of the range implies a price gain of just over 5% and, adding dividends, a total return of just over 7%. That translates to a Dow Jones industrial average of around the 28,500 mark. Whether our call is wide of the mark, and whether the peak in 2020 comes at midyear or year-end, depends largely on how much the U.S. presidential election roils the market. Well also note that in 2020, a U.S. blue-chip barometer like the S&P 500 might not be your only gauge of success, as small-company stocks and foreign holdings may shine as well.

U.S. manufacturing contracted in October for the third straight month, as global trade tensions continued to weigh on the sector. But the report was an improvement from the previous month, and similar indexes are showing more of an inflection. Youre seeing early green shoots that the manufacturing recession is bottoming, says Lindsey Bell, chief investment strategist at Ally Invest. (For more, see our interview with Bell.)

For the U.S. economy overall, Kiplinger expects growth of 1.8% in 2020, compared with an expected 2.3% in 2019 and 2.9% in 2018. Business spending in the U.S. has been subdued by uncertainty about a trade deal, the fallout from Brexit and angst over the presidential election. But with unemployment at decades-long lows, consumers, who account for the bulk of the U.S. economy, remain a strong underpinning. So does the Federal Reserve, which has cut short-term rates three times since June.

Kiplinger expects the unemployment rate to inch up to 3.8% in 2020 from 3.6% in 2019, and the Fed to cut rates at least once early in 2020. The economy is in a tug-of-war between geopolitical risk and the underlying resilience of the American household, plus the Fed, says Mike Pyle, global chief investment strategist at investment giant BlackRock. He is betting on the side that has U.S. consumers and central bankers on it.

To say 2019 was a disappointing year for corporate earnings is an understatement. Wall Street analysts expect tepid profit growth of 1.3% for 2019, according to earnings tracker Refinitiv. But context is key: Its no surprise that 2019 earnings were flat compared with profits in 2018 that were supercharged by corporate tax cuts.

For 2020, analysts expect robust earnings growth of just over 10%. Those rosy projections are no doubt highconsider that a year ago, analysts predicted earnings growth of 10% for 2019, too. A more realistic expectation for earnings growth in 2020 is roughly half the consensus estimate, or 5% to 6%, says Alec Young, managing director of FTSE Russell Global Markets Research. Still, thats sufficient to keep the market moving higher, he says.

Reversing 2019 trends, the strongest profit growth is expected from the energy, industrials and materials sectorsthe three biggest laggards in 2019. Based on earnings estimates for the next four quarters, the S&P 500 is trading at 17.5 times earningshigher than the five-year average P/E of 16.6 and the 10-year average of 14.9, but far from outlandish levels.

Before worrying about the 2020 presidential election, investors must first parse the potential fallout from a presidential impeachmentor not. The view on Wall Street is that even if President Trump is impeached, his removal from office is unlikely, and the exercise will turn out to be neutral for stocks. The whole impeachment process is more political theater than anything else, says Phil Orlando, chief stock strategist at Federated Investors.

And although the election promises to be a nail-biting affair, consider that, dating back to 1833, stocks have returned an average of 6% in presidential election years, according to the Stock Traders Almanac. In terms of election outcomes, the worst for stocks historically has been a Republican president with a split Congress, according to RBC Capital Markets (with 2019 being a glaring contradiction). Going back to 1933, whenever that leadership configuration has been in place, the S&P 500 has returned just 4% annualized. The best returns, 14% annualized, come under a Democratic president and a split Congress.

No sector is more in the policy crosshairs than health care, with insurers and drug makers buffeted by proposals to curb prescription prices and expand Medicare. These are variations on familiar themes, and health care stocks often lag ahead of U.S. elections, reports Goldman Sachs, falling behind the S&P 500 by a median of seven percentage points in the 12 months preceding the 11 presidential elections since 1976. As a result, Goldman recommends that investors tilt away from health care stocks. Investors should tread carefully with other sectors most at risk of potential policy changes, including energy (climate risk disclosures, carbon emissions regulations, fracking bans) and financials (more regulation, caps on credit card interest, student debt forgiveness).

It may seem counterintuitive at this late stage, but the market in 2020 could reward a little more risk-taking, especially when it comes to betting on cyclical stocks (those that are more sensitive to swings in the economy). It has been rewarding to be defensively aligned over the past 18 months, says Mark Luschini, chief investment strategist at Janney Capital Management. Were beginning to detect a subtle, but we think persistent, shift to cyclical sectors. We think thats where we want to be positioned in 2020.

Consider consumer discretionary stocks (those of companies that make nonessential consumer goods). Investors can take a broad-based approach with Consumer Discretionary Select Sector SPDR (symbol XLY, $121), an exchange-traded fund whose top holdings are Amazon.com (AMZN) and The Home Depot (HD). Sam Stovall, chief strategist at research firm CFRA, says the firms favorite discretionary stocks include automotive retailers CarMax (KMX, $93) and OReilly Automotive (ORLY, $436). Bank of America Merrill Lynch recently recommended Mid-Atlantic homebuilder NVR (NVR, $3,637) in the wake of a pullback in the shares in mid October.

BofA also likes shares of industrial bellwether Caterpillar (CAT, $138), and it has raised its 12-month price target on the stock from $154 to $165 a share. Within financials, UBS Investment Bank recommends insurance giant American International Group (AIG, $53) based on its outlook for improved underwriting results and increasing profit margins.

Tech is another promising sector for 2020, but with a twist, says Paulsen. The large caps are over-owned and over-loved, he says. Smaller names have done just as well, they have faster growth rates, and theyre not in the crosshairs of regulators, he adds. Stocks in the S&P SmallCap 600 Information Technology index trade at close to the same P/E as stocks in the S&P 500 infotech index, Paulsen notes, when the former typically command an 18% premium. Worth exploring: Invesco S&P SmallCap Information Technology ETF (PSCT, $91). Top holdings include Cabot Microelectronics (CCMP), Viavi Solutions (VIAV) and Brooks Automation (BRKS).

Dont abandon defensive holdings, such as consumer staples, utilities or low-volatility stocks. But youll want to scout for the less-pricey names. For example, Credit Suisse has come up with a list of low-volatility stocks with what the firm considers more-reasonable valuations, including advertising firm Omnicom (OMC, $77) and tech company Citrix Systems (CTXS, $109).

For years, value stocks (those that are bargains based on corporate measures such as earnings or sales) have not kept pace with growth stocks (those boosting earnings and sales faster than their peers). The S&P 500 Value index has trailed its growth counterpart by more than five percentage points over the past three years. Since September, however, the value index has trounced growth, returning 6.5%, compared with 2%. Weve seen such head fakes before. But analysts at Bank of America Merrill Lynch see a convergence of signs for a sustained value run. Among them: Value stocks, which tend to overlap with industries that are sensitive to economic swings, typically outperform when economic data start to perk up and when corporate profit growth accelerates.

Moreover, according to BofA, value stocks have been shunned by fund managers, leaving them both inexpensive and with lots of room to run. The S&P 500 Growth index recently traded at 22 times estimated earnings for the year ahead, compared with 15 for its value counterpart. Consider adding some value to your portfolio with two funds from the Kiplinger 25, the list of our favorite no-load funds: Dodge & Cox Stock (DODGX) and T. Rowe Price Value (TRVLX).

Yields on 10-year Treasuries sank as low as 1.47% this past summer as recession fears reached a crescendo. Since then, the Fed has pushed short-term rates lower, and 10-year Treasury yields inched back up to 1.7% by the end of Octoberonce again higher than shorter-term yields, thereby negating the dreaded recession harbinger of the so-called inverted yield curve. Still, Kiplinger doesnt expect 10-year Treasury yields to climb above 2% as long as the trade war lasts, which poses challenges for income investors. You need the ballast of Treasuries in your portfolio when theres volatility, says Young, at FTSE Russell. But with rates at crazy-low levels, its important to get income from other sources as well.

High-yield bonds (avoid the oil patch), emerging-markets bonds and dividend-paying stocks such as real estate investment trusts and utilities are good places to hunt for yield. Funds to consider include Vanguard High Yield Corporate (VWEHX), yielding 4.5%, and TCW Emerging Markets Bond (TGEIX), yielding 5.1%. Schwab US Dividend Equity (SCHD, $56), a member of the Kiplinger ETF 20 list of our favorite ETFs, invests in high-quality dividend payers and yields just over 3%. Spath, at Sierra Funds, is bullish on preferred stocks. IShares Preferred and Income Securities ETF (PFF, $37) yields 5.5%. (For more ideas, see Income Investing.)

A combination of low valuations and fewer headwinds could make international markets worth exploring in 2020. A comparison of MSCI market indexes in relation to expected earnings shows the U.S. recently trading at a P/E approaching 18, compared with almost 14 for the Eurozone and just 12 for emerging markets.Meanwhile, the European Central Bank launched another round of monetary stimulus in October, and the Fed easing rates in the U.S. should help lift currencies and financial markets in emerging countries. Global trade tensions could de-escalate as the U.S. election approaches, and Britains divorce from the EU has taken on a more civil tone.

The good news on the policy front is recent and may take a few months to boost the global economy, says market strategist Ed Yardeni, of Yardeni Research. But in terms of portfolio strategies, he says, the bottom line is that Stay Home has outperformed Go Global during most of the current bull market, but Stay Home could lag over the next six to 12 months. A worthy choice for investors considering adding some international exposure is Dodge & Cox International Stock (DODFX), with an expense ratio of 0.63%. The fund, which reopened to investors this past spring, has a value tilt and at last report had nearly 20% of assets invested in emerging markets. Top holdings include two French firms, drug maker Sanofi and banker BNP Paribas.

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For years, marijuana has been Wall Street's hottest investment opportunity. Wall Street projections have suggested that worldwide weed sales could grow somewhere between fivefold and 18-fold over the next decade, with the loftiest estimate implying that $200 billion in annual global sales may be possible. These estimates, along with the sheer size of the black market, have proven to be more than enough to get investors, and cannabis companies, excited about the future.

Beginning in 2018, merger and acquisition (M&A) activity, and outside investment into the North American marijuana industry, really began to pick up. We started to see M&A deals among Canadian growers, followed by combinations of U.S.-focused multistate operators. We even had brand-name businesses drop quite a bit of green into the cannabis space.

Image source: Getty Images.

For example, in August 2018, Constellation Brands, the alcohol producer behind such names as Corona and Modelo, announced that it would be taking a $4 billion equity investment in Canopy Growth, the largest pot stock in the world. Then, in December 2018, tobacco giant Altria Group (NYSE:MO) announced plans to invest $1.8 billion into Cronos Group (NASDAQ:CRON).

Unfortunately, investments don't always pan out as planned, as Altria shareholders have found out in recent months.

Altria and Cronos looked to have a good thing when Altria's equity investment closed in mid-March. When the deal finalized, Altria owned a 45% equity stake in Cronos Group, with the option of upping its stake by an additional 10 percentage points to 55% via warrants that were also granted. But what was important here is that each company gained access to what they sorely needed.

For Altria, this was an opportunity to reignite top-line growth. U.S. adult cigarette smoking rates hit an all-time low in 2017, according to data from the Centers for Disease Control and Prevention, and they're trending even lower. The dangers of smoking tobacco have caused consumers to rethink their nicotine consumption, with users choosing other options, such as vaping, over traditional tobacco cigarettes. That's a big problem for Altria, which has simply chosen to increase its prices at this point to combat the shipment volume slowdown.

Image source: Getty Images.

Altria's investment into Cronos was designed to give it access to the high-growth Canadian/North American cannabis market, and presumably allow it to aid Cronos in the rollout of vape products containing targeted cannabinoids. Investment firm Cowen Grouppredicted in March that vapes would be the top-selling cannabis derivative in the U.S. market, and would trail only dried cannabis flower in aggregate annual sales.

Then, there's Cronos Group, which desperately needed a cash infusion. Prior to the closing of the deal, Cronos had less than $25 million in cash left, yet had aggressive plans to enter the U.S. and other overseas markets, as well as the desire to expand inorganically. Altria made this possible by handing over $1.8 billion in cash in exchange for a 45% stake. Without this cash, Cronos' $300 million acquisition of Redwood Holdings, owner of the Lord Jones brand of cannabidiol-based beauty products, probably wouldn't have been possible.

However, this investment hasn't exactly worked out for Altria -- at least not yet. Cronos' share price has tumbled by two-thirds since the equity investment was finalized. Based on the $1.8 billion Altria invested into Cronos, the company is currently sitting on a paper (unrealized) loss of $731 million, as of Nov. 25.

Regulatory and procedural issues in Canada have, by far, been the biggest issue for Cronos, along with the rest of its peers. Health Canada, which is tasked with overseeing the licensing process of the pot industry, has been exceptionally slow to approve growing and sales licenses.

Image source: Getty Images.

To add, select provinces have done a poor of job of approving licensed retailers. Ontario, for instance, has about one open dispensary for every 604,200 people in the province. That's insanely low, and it's effectively driven consumers to the black market, if they weren't already purchasing from illicit producers.

Both Health Canada's licensing backlog and the slow-stepped dispensary rollout in Ontario are fixable, but these issues will take numerous quarters to sort out. That's left the Canadian weed industry in a precarious situation, whereby some growers are contending with oversupply, yet the bulk of market demand still isn't being met by legal-channel product.

It also hasn't helped that Cronos Group continues to lose money on an operating basis, if fair-value adjustments on biological assets and derivative liability revaluations are stripped from the equation. Earnings actually matter now with pot stocks, and Cronos hasn't been able to step over the bar as of yet.

Yet, in spite of Cronos Group's struggles, it might actually make sense for Altria to consider making a bid for the entire company. At this point, $1.25 billion in market cap is what Altria doesn't own of Cronos, which represents what Altria generates in levered free cash flow in two months. In other words, Altria has more than enough capital to throw at the wall to see what sticks.

Image source: Getty Images.

There's also little doubt that the marijuana industry has the potential to be huge many years down the line. The sheer dollar amount of sales being conducted in the black market each year serves as a reminder of just how big the legal pot market could be. With tobacco sales struggling, it only makes for Cronos Group to consider alternative vice products.

But the biggest dangling carrot of all might just be the ability to recoup a significant portion of its original equity investment. Think about this for a moment: Cronos Group still had $1.5 billion in cash, cash equivalents, and short-term investments, as of the end of the latest quarter. Even if Altria acquired the remaining shares of Cronos, based on its Nov. 25 closing price, at a 20% premium to the close, it would get the remaining shares for free given the $1.5 billion in cash currently sitting in the company's coffers.

The only question at this point is, does Altria want the hassle of owning a cannabis company? And that's an answer I don't have.

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The company that owns the Dayton Mall, which has purchased the attached vacant Elder-Beerman store, plans to invest in the redevelopment of the space.

The Dayton Daily News first reported last week that Washington Prime Group purchased the 220,000-square-foot space from Elder Ohio, a trust registered in Delaware. The $3.6 million deal included 15 acres, according to Montgomery County records.

The Miami Twp. location has been vacant since Elder-Beerman closed and went out of business in August 2018. When malls dont have control of anchor real estate, it can hold up redevelopment. Washington Prime Group in the past has said it couldnt fill the space, along with the vacant Sears store, because the company did not own either.

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Theres plans in the works, the malls general manager Dave Duebber said last week. This has been a long process so were excited.

Now that the big-box store is controlled by mall leaders, Washington Prime Group plans to leverage exciting redevelopment opportunities, according to a statement released Monday.

Washington Prime Group is currently in planning and negotiations with several local stakeholders, including Miami Township and existing and prospective tenants and partners, the statement said.

The Dayton Mall has had luck finding tenants to fill large vacant spaces in recent years. A Ross Dress For Less recently opened in the former hhgregg space and The Room Place will open in the upcoming months in a new in-line space created in the former Old Navy store.

A transformation is underway to strengthen Dayton Mall as the hub of retail, dining and entertainment in the area. With plans to invest millions of dollars into the town center over the next several years, the long term vision for Dayton Mall is reflective of the community, Washington Prime Group said in the statement.

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Redevelopment of the Dayton Mall area began about four years ago when Miami Twp. began developing a master plan of the area. The plan adopted in 2018 calls for more than $200 million in investments.

We saw the need early on to transform the area into a multi-use, walkable development, and the master plan has served as the facilitator bringing us to where we are today, said Chris Snyder, director of community development for Miami Twp.

Seritage Growth Properties still owns the Sears box at the Dayton Mall, but Washington Prime Group is working closely with the company and Miami Twp. to redevelop the space.

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Matthew Beesley, group head of investments at GAM Investments, will be departing from the firm in 2020, a spokesman said.

Mr. Beesley has decided to pursue career opportunities outside the firm. He will not be replaced, and his responsibilities will be assumed internally, the spokesman confirmed.

Steve Rafferty, group chief operating officer, will take over Mr. Beesley's responsibilities for front-office controls and trading. Mr. Beesley did not manage any client money at GAM. Mr. Beesley's business management duties will be assumed by the respective heads of the two investment groups: Anthony Lawler, head of systematic and solutions, as well as discretionary; and a new head, who will be hired in the coming months.

Mr. Beesley is due to leave GAM in the second quarter of 2020 following a transition of his responsibilities.

GAM had 135.7 billion Swiss francs ($136.9 billion) in assets under management as of Sept. 30.

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Cultural attitudes toward cannabis have been in a state of rapid change over the last few decades in America. Currently, 33 states have legalized some form of marijuana, and 1 in 4 Americans live in a place where marijuana is allowed for recreational use.That patchwork of legality presents a challenging business climate for the cannabis industry, but its still attracting plenty of companies looking to serve this newly legalized market and many of them have publicly traded stocks that any investor can buy.

But are Americans ready to seriously consider investing in the cannabis industry, which sells a product thats still illegal at the federal level?Alongside all of the normal concerns that one should have about a nascent, unprofitable industry, the additional layer of uncertainty driven by marijuanas murky legal status remains a primary issue. But then again, America has rarely found itself with a lack of speculators who are willing to look past those risks and chase what could be a unique opportunity for enormous growth.

The question of Americans attitudes toward the cannabis industry was at the core of a survey conducted by GOBankingRates. The survey asked over 800 investors about their thoughts concerning marijuana and whether cannabis stocks could become a part of their nest egg. The results demonstrated that, despite peoples concerns about the future of the legal cannabis industry, about half of Americans have already started making investments or are open to investing in pot stocks down the line.

A majority said that they would never be ready to invest in cannabis stocks.However, despite the uncertainty surrounding the industry, about 10% of investors have already decided to take the plunge. With another 40% saying they would remain open to investing in pot stocks at some point in the future, the investing public appears to be evenly split over the cannabis industry which is arguably an impressive vote of confidence in a new industry operating in a very uncertain legal landscape.

In many nascent industries there can be speculative bubbles, said Robert R. Johnson, a professor of finance at Creighton Universitys Heider College of Business. If ones timing is right, there is potential for very high returns in a short period of time in speculative bubbles. Conversely, if ones timing is wrong, fortunes can be erased in speculative bubbles.

There appears to be a general acceptance of cannabis as a legal enterprise across all age groups, save for one those 65 and older. Among this age group, nearly two-thirds of respondents said they would never consider investing in the cannabis industry. And, while men were slightly more likely than women to already be investing in pot stocks, the proportion of men and women who didnt think they would ever invest in the industry was about the same, at 51% and 52%, respectively.

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While seeing a change in the federal law would clearly make the cannabis industry more appealing to Americans in fact, 35% of investors agreed with this GOBankingRates found other potential changes that would incite them to get involved with pot stocks.Nearly 1 in 5 Americans said they would consider investing in pot stocks if a financial advisor recommended it,and 16% said they might start investing if more cannabis companies went public.

However, about one-third were unswayed by any of the potential changes to the cannabis industry or other factors. Making up most of this segment were respondents ages 65 and older.About 48% of respondents in this age group said they would never invest regardless of any change in legal status, compared with only 35% of respondents ages 55-64 who agreed with that statement. At the same time, Americans ages 65 and older were more likely to say that theyd invest in the cannabis industry if a financial advisor recommended it.

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Men were consistently more open to investing in cannabis than women,with 41% of female respondents claiming they would never invest in the cannabis industry versus only 32% of male respondents. For both men and women who were open to investing in pot stocks, the legal status of marijuana at the federal level was the most important factor under consideration.

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The inconsistent legal status of cannabis across the country truly appears to be the primary concern for people who are otherwise open to investing in pot stocks. Since marijuana is still on the Drug Enforcement Administrations list of Schedule I drugs, American marijuana companies are operating in a gray area, according toKendall Almerico, legal counsel for Goldenseed, a cannabis company based in Santa Cruz, California.

Yes, they are operating legally within the state where they are regulated. But, they are also operating illegally under federal law, even in those states where marijuana is legal,Almerico said. The good news is the federal government is pretty much ignoring cannabis activity in states that have legalized cannabis. Because of this uncertainty, there is both a big upside if things go very well in the industry, and big downside if the federal government decides to suddenly change course and starts to enforce federal law.

While there was strong support for legalizing cannabis at the federal level, GOBankingRates survey also revealed thatthe amount of money Americans are willing to invest in cannabis remains on the low side. About 1 in 5 investors said they would invest less than $100 initially, and 16% said they would invest between $100 and $499.Taken together, the data shows that some investors are ready to give serious consideration to cannabis companies, but theres also some healthy skepticism both in how much theyre ready to invest and the conditions needed for them to start investing.

However, Americans attitudes toward investing in cannabis may also change indirectly as a result of legalization. Having marijuana legal at the federal level would open up more business opportunities for other countries seeking to enter the U.S. cannabis industry. If cannabis were to become legal at the federal level in the U.S., Canadian licensed producers would likely begin to ship their products into the country, said Michael Cammarata, the CEO of Neptune Wellness Solutions, a Canada-based health and wellness company that specializes in cannabis and industrial hemp extraction and other products. He added that Canadian LPs already have plans to do so despite the precarious legalization timeline.

Companies will be on both sides of the border no matter what, Cammarata said. The upside here is despite legalization, investments in the industry are still worthwhile.

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It should come as no surprise that a plurality of survey respondents said the cannabis industry is growing fast. This impression of pot stocks helps explain why investors are still interested despite the risks. However, one-third of respondents made sure to note the uncertainty surrounding the industry, and roughly 1 in 4 identified the negative stigma attached to cannabis.

Younger people were much more likely to identify the industry as growing fast at least 40% of every age demographic, save for those 65 and older, agreed but two age groups were particularly bullish. Nearly half of respondents ages 35-44 and respondents ages 45-54 felt that the industry was fast-growing. Additionally, men saw much greater potential in the cannabis space. Male respondents were almost twice as likely as female respondents to say that cannabis stocks are risky but provide opportunities to earn big returns, at25% and 14%, respectively.

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Related: The Complete Guide to ETFs

Its impossible to say at this point what the future holds for the legal cannabis industry in the U.S. as piecemeal, state-by-state legalization efforts continue. However, its clear that a significant portion of investors are showing an early interest in the cannabis industry. It seems to be a very cautious interest and one that doesnt involve investing large sums yet but this interest is shared by nearly half of investors.

That said, the survey results also reveal a substantial group of Americans who remain staunchly opposed to ever investing in the cannabis industry even if it were legalized by the federal government. These holdouts, many of whom are 65 and older, arent ready to put their savings at risk, even though some of them acknowledge the significant potential for growth in the industry.

Investors and speculators alike should recognize that cannabis is a commodity like anything else, Johnson said. As cannabis is legalized and mainstreamed, more and more growers will plant cannabis. As more cannabis is supplied, its price will fall.

If youre open to expanding into a new area like pot stocks, you should take the time to carefully consider your investment options, which can help you reduce the overall risk to your portfolio.

5 Best Investment Apps: Commission-Free Trading and More

The most important step in reducing risk is buying an ETF that contains as many high-quality cannabis stocks, saidJon Vlachogiannis, the founder of AgentRisk, a wealth management product thats driven by machine learning and active management strategies. The space is very volatile and investing in a single cannabis stock is like playing Russian roulette.

Beyond investing in a good exchange-traded fund,Vlachogiannis stressed the importance of having a balanced, diversified portfolio.

Believing in the potentiality of a market is healthy but placing all your eggs in one basket is a terrible investment proposition, he said. The saying is true: Dont get high on your own supply.

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Chris Jennings contributed to the reporting for this article.

Last updated: Dec. 2, 2019

Methodology:GOBankingRates surveyed 839 Americans ages 18 and older from across the country between Oct. 24, 2019, and Nov. 15, 2019, asking five different questions: (1) Would you ever consider investing in cannabis/marijuana stocks or other securities? (2) Do you think the use of marijuana should be legal at the federal level? (3) What are your impressions of cannabis/marijuana stocks and the industry itself? (4) Would you start investing OR invest more in the cannabis industry if any of the following were to happen? and (5) If you were to invest in the cannabis industry and/or cannabis stocks, how much money would you initially invest? For questions No. 3 and No. 4, respondents could select all the answers that applied. To qualify for the survey, respondents had to answer yes to the following screener question: Do you currently invest in the stock market (including a 401(k) or IRA)? This survey was commissioned by ConsumerTrack Inc. and conducted by Survata, an independent research firm in San Francisco. Respondents were reached across the Survata publisher network, where they take a survey to unlock premium content, like articles and e-books. Respondents received no cash compensation for their participation. More information on Survatas methodology can be found at survata.com/methodology.

This article originally appeared on GOBankingRates.com: Survey: Americans Are Ready To Invest In Cannabis

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For the month of November, The Esports Observer logged 11 esports industry investments. Several teams raised additionals funds and esports organization Misfits Gaming Group launched a $10M USD esports and gaming incubator and seed fund. Furthermore, Artist Capital established a $100M esports fund and RedBird Capital put $125M towards licensing NFL and MLB players commercial rights.

Following two months that saw more than $200M in disclosed investments, The Esports Observer tracked $343M in disclosed investments in the esports industry.

This marks the second-highest amount in 2019 after Julys $556.63M in disclosed investments. Financial terms were not disclosed for all deals highlighted in this article.

To help athletes maximize the value of their name, image, and likeness rights, the National Football League Players Association (NFLPA) and the Major League Baseball Players Association (MLBPA) partnered with venture capital firm RedBird Capital Partners and launched OneTeam Partners.

RedBird Capital invested $125M into OneTeam Partners and holds a roughly 40% stake. The players associations own the remaining ~60% stake.

Gaming and esports assets are part of the licensing deals. The two players associations earn roughly $120M in combined annual revenue from licensing deals with companies including Madden NFL publisher Electronic Arts and MLB The Show publisher Sony.

Investment management firm Artist Capital Management LLC announced it had raised $100M to establish its first fund, the Artist Esports Edge Fund. With the Esports Edge Fund, the firm seeks to provide institutional investors with exposure to esports companies.

The Artist Esports Edge Funds current investment portfolio includes 100 Thieves, a Los Angeles-based lifestyle brand and esports organization; Washington Esports Ventures, owner of the Washington Justice franchise in the Overwatch League; as well as undisclosed chatting and viewing apps in the ecosystem.

In addition to the funds going towards the Esports Edge Fund, the firm also raised $35M of incremental capital from its undisclosed limited partners in separate co-investment vehicles. Those funds were all deployed in 2019 to further support Esports Edge Fund portfolio companies.

Game developer Super Evil Megacorp closed a $10.5M financing round led by venture capital firm Andreessen Horowitz to develop its next game, Project Spellfire, a cross-platform title that has yet to be detailed. Furthermore, the developer has passed development duties of Vainglory on to a partner studio.

The streaming technologies developer Genvid Technologies raised a $27M Series B financing round led by New York-based Galaxy Interactive. Additionally, all of Genvids existing investors (March Capital Partners, OCA Ventures, Makers Fund, and Horizon Ventures) and new investors (Valor Equity Partners and K5 Global) participated in the investment round. Proceeds of the investment will be used to accelerate the companys development of interactive streaming tools and services.

The video conference gaming developer Bunch closed a $3.85M second Seed financing round from investors, including Supercell, Tencent, Riot Games, Miniclip, and Colopl Next. This funding brings Bunchs total investment sum raised to $8.5M.

Misfits Gaming, Florida Mayhem, and Florida Mutineers parent Misfits Gaming Group launched the $10M esports and gaming incubator and seed fund MSF.IO. According to the fund, it is looking to provide a pathway for innovators to nurture and grow ideas that will help evolve the esports and gaming industry.

French esports organization Team Vitality raised a $15.5M second funding round from Indian technology entrepreneur Tej Kohlis Rewired.GG gaming fund. Moreover, the organization opened its new esports complex in Paris called V.Hive, which includes office space for the company, a public gaming center, co-working space, shop, and cafe.

Following an initial $3M Series A investment, EVOS Esports added to its now $4.4M Series A investment as it looks to seize the market of gaming influencer management in South-east Asia. The initial $3M funding was backed by Insignia Ventures Partners, while the most recent $1.4M came from a group of angel investors from Indonesian conglomerates, as well as from the top-level management of a leading e-commerce player in China.

The Overwatch League franchise Houston Outlaws was acquired by the Beasley Media Group from the Immortals Gaming Club. The Outlaws will remain in Houston and represent the Houston, Austin, and San Antonio areas. Beasleys acquisition of the Outlaws marks its third venture into the esports space with investments in Renegades, a multi-team esports organization; and CheckpointXP, a weekly syndicated lifestyle show which was the first collegiate-based esports show in the U.S.

Rogue parent company ReKTGlobal added to its list of celebrity investors. Landon Collins, a safety for the Washington Redskins and five-season NFL veteran, invested into the organization. According to a release, Collins and ReKTGlobal plan strategic integrations and partnerships during the NFL offseason, and he will also help with the companys continued expansion.

Performance sponsorship data platform FanAI secured an $8M Series A financing round led by Japanese business conglomerate, Marubeni Corporation, to support FanAIs continued expansion and growth. Further investors participating in the funding round include Allectus Capital, CRCM Ventures, Courtside Ventures, GC Tracker Fund, M Ventures, Sterling.VC, and GFR Fund. The funding brings the companys total raised capital to over $12.5M.

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President Obama got some things done when it came to rebuilding Americas aging infrastructure. But not a ton, as the infrastructure spending was allocated from the broader $800 million stimulus plan designed to lift the U.S. economy out of the Great Recession.

As for President Trump, he ran on a plan to spend $1 trillion plus to rebuild decaying bridges, roads and railroad tracks. In February of this year, there was reportedly bipartisan support for a $2 trillion infrastructure spending package. But with neither party being able to find ways to pay for the program and the president locked in an impeachment battle with the Democrats, the prospect for an infrastructure spending plan within the next year or so looks remote.

Even if former Vice President Joe Biden wins the presidency in 2020 (which currently looks like a slim chance), his recent proposal to spend $1.3 trillion to rebuild the U.S. infrastructure appears to be a medium-term pipe-dream. But at some point within the next decade, Congress and the executive branch will have to find a way to pay for the rebuilding of Americas infrastructure.

There is no other choice as lives are at risk.

According to the latest available report from the American Society of Civil Engineers (2017), U.S. infrastructure gets a grade of D+. Thats the same grade it got back in 2013.

Assessments are released every four years.

The American Society of Civil Engineers projects the U.S. needs to spend a dizzying $4.5 trillion by 2025 to improve the state of its roads, bridges, dams and airports.

For investors, making a bet today via purchasing stocks of companies that could play a key role in rebuilding U.S. infrastructure may be a wise move. A rebuilding plan of any kind is not priced into the sector so when the inevitable plan does arise because there is no other choice to fund one, industrials of all kinds could be re-rated higher by the market.

New York Governor Andrew Cuomo drives a 1955 Chevrolet Corvette with World War II veteran Armando "Chick" Gallela, during a dedication ceremony for the new Governor Mario M. Cuomo Bridge that is to replace the current Tappan Zee Bridge over the Hudson River in Tarrytown, New York, U.S., August 24, 2017. REUTERS/Mike Segar

Well-known dealmaker and investor Sir Martin E. Franklin is one getting on board the infrastructure play today.

Look, you dont have to be an economist or industrialist to just look at American infrastructure and know that it needs a lot of investment. The U.S. is badly in need of infrastructure improvement, Franklinsaid on Yahoo Finances The Final Round.Franklin, who founded consumer products conglomerate Jarden and sold it to Newell Rubbermaid in 2015 for $13.2 billion, acquired diversified industrial APi Group in September for about $2.9 billion through his investment vehicle J2 Acquisition.

APi Group does everything from serving as an oil pipeline contractor to offering fire protection and security services. Franklin believes the business is primed to benefit from a pickup in infrastructure spending. He and his team continue to actively scout for other industrial-centric businesses to add to J2 Acquisitions holdings.

So yes, I think its [infrastructure] a good long-term play for investors, Franklin added.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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