Markus Andrews

The IBM logo is displayed on a smartphone in Poland.
Omar Marques | Lightrocket | Getty Images

The major averages have been on a sharp upward turn since Donald Trump won the presidential election last week, but investors who want to buffer their portfolio from future market shocks may want to add dividend stocks.
To select the right dividend stocks, investors can consider the recommendations of top Wall Street analysts, who have a strong track record and provide useful insights based on a thorough analysis of a company’s fundamentals.

Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Enterprise Products Partners
This week’s first dividend pick is Enterprise Products Partners (EPD), a midstream energy services provider. For the third quarter of 2024, EPD announced a distribution of $0.525 per unit, reflecting a 5% year-over-year increase. EPD offers a high yield of 6.9%.
The company also enhances shareholder returns through share repurchases. During Q3 2024, EPD made repurchased about $76 million worth of its common units.
Following EPD’s Q3 results, RBC Capital analyst Elvira Scotto reiterated a buy rating on the stock with a price target of $36. The analyst noted that the company’s Q3 earnings before interest, tax, depreciation and amortization of $2.442 billion was in line with Wall Street and RBC’s estimates, with increased natural gas marketing contributions offsetting a decline in the margins of the octane enhancement business and crude oil marketing.
Scotto highlighted EPD’s robust backlog of organic growth projects, with notable projects expected to come online next year and fuel the company’s growth. The analyst also expects the company to benefit from the recently completed acquisition of Pinon Midstream.

“We continue to believe the steady cash flow and EPD’s strong balance sheet (+/- 3.0x financial leverage target) can comfortably handle the spend and drive meaningful long-term growth,” said Scotto.
Scotto ranks No. 20 among more than 9,100 analysts tracked by TipRanks. Her ratings have been profitable 70% of the time, delivering an average return of 21.6%. See EPD Stock Buybacks on TipRanks.
International Business Machines
We move to the next dividend stock, IBM (IBM). The tech giant recently reported mixed results for the third quarter. Earnings exceeded analysts’ estimates, but the top line fell short of expectations as the solid growth in Software revenues was partially offset by lower Consulting and Infrastructure revenues.
In Q3, IBM generated free cash flow of $2.1 billion and returned $1.5 billion to shareholders through dividends. IBM stock offers a dividend yield of 3.1%.
Following investor meetings with IBM management, Evercore analyst Amit Daryanani reaffirmed a buy rating on IBM stock with a price target of $240. The analyst stated that after the meetings, he has a “more constructive view of the durability of the company’s long-term growth and their critical role as an enabler of hybrid IT + AI technologies.”
Commenting on IBM’s Enterprise artificial intelligence positioning, Daryanani thinks that IBM is capable of addressing the AI opportunity in both its Software and Consulting businesses. He highlighted that IBM’s AI book of business has increased to more than $3 billion, up from $1 billion a quarter ago, with about 80% of the bookings coming from the Consulting business.
Daryanani noted the strength in IBM’s Software business and expects this momentum to continue, driven by persistent growth in Red Hat (acquired in 2019), transaction processing growth, demand for AI/data solutions, and mergers and acquisitions. Further, the analyst expects the Consulting business to recover next year.
Overall, Daryanani is confident about IBM’s prospects under the leadership of CEO Arvind Krishna. He is optimistic about the company’s ability to grow its profit at a higher rate than revenue, thanks to the increasing Software mix, operating scale and cost optimization efforts.
Daryanani ranks No. 316 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 58% of the time, delivering an average return of 12.3%. See IBM Hedge Fund Activity on TipRanks.
Ares Capital
Finally, let’s look at Ares Capital (ARCC), a specialty finance company that provides financing solutions to private middle-market companies. ARCC recently reported solid third-quarter results, attributing them to strong new investment activity and healthy credit performance.
Also, Ares Capital announced a dividend of 48 cents per share for the fourth quarter, payable on Dec. 30. ARCC stock offers a dividend yield of 8.9%.
Following the Q3 print, RBC Capital analyst Kenneth Lee reaffirmed a buy rating on the stock and slightly raised the price target to $23 from $22. The analyst’s bullish stance is backed by ARCC’s “strong track record of managing risks through the cycle, well-supported dividends, and scale advantages.”
Lee lowered his adjusted EPS estimates for 2024 to $2.36 from $2.39, and he trimmed them for 2025 to $2.13 per share from $2.17 per share to account for reduced yield assumptions and changes in dividend income assumptions. Nonetheless, he is optimistic about the company’s potential due to its solid credit performance and less downside risk owing to a favorable macro backdrop.
Lee highlighted that ARCC’s portfolio activity was greater than expected, with Q3 witnessing net additions of more than $1.32 billion, much greater than RBC’s estimate of over $800 million. He also noted the company’s improved credit performance, with non-accruals moving down to 1.3% in Q3 from 1.5% in the second quarter.
Overall, Lee thinks that ARCC has the potential to deliver above peer-average return on equity and views its scale as a competitive advantage.
Lee ranks No. 34 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 70% of the time, delivering an average return of 17.2%. See ARCC Stock Charts on TipRanks. More

Rafael Henrique | SOPA Images | AP

Company: Verona Pharma (VRNA)

Business: Verona Pharma, a clinical stage biopharmaceutical company, focuses on development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The company’s product candidate is ensifentrine, an inhaled and dual inhibitor of the phosphodiesterase (PDE) 3 and PDE4 enzymes that acts as both a bronchodilator and an anti-inflammatory agent in a single compound. This medication is in Phase 3 clinical trials for the treatment of chronic obstructive pulmonary disease, asthma and cystic fibrosis. The company is developing ensifentrine in three formulations, including nebulizer, dry powder inhaler and pressurized metered-dose inhaler. Verona Pharma was incorporated in 2005 and is headquartered in London.
Stock Market Value: ~$3.16B ($38.58 per share)

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Verona Pharma shares in 2024

Activist: Caligan Partners LP

Ownership: n/a
Average Cost: n/a
Activist Commentary: Caligan Partners was founded by former Carlyle Group managing director David Johnson, and it launched its main fund in 2022. It invests in a concentrated portfolio of small and midcap life sciences companies, using activism as a tool to unlock value. Caligan looks for companies with differentiated intellectual property and durable assets that have underperformed their peers. The firm will take board seats when it thinks it can add value. The way the firm thinks about biopharma investing is somewhat unique. It looks for companies that are first in class and best in class in their therapies; companies where it has some downside protection; companies with a good management team; and opportunities where the firm thinks it could add value. Caligan looks to work constructively with boards and management but will not shy away from a proxy fight, if necessary.

What’s happening

On Oct. 22, Caligan announced that it has taken a position in Verona Pharma.

Behind the scenes

Verona Pharma is a clinical stage, pre-revenue, biopharmaceutical company that focuses on the development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The company’s current product candidate and potential value creator is ensifentrine (commercially “Ohtuvayre”), an inhaled and dual inhibitor that acts as both a bronchodilator and an anti-inflammatory agent. Ohtuvayre was recently approved by the FDA for maintenance treatment of chronic obstructive pulmonary disease (COPD) on June 26. Back in May 2022, prior to this approval and when Caligan began building their initial position, the stock was trading in the mid-single digits and at essentially cash value. With the commercial launch of Ohtuvayre, Verona’s first-ever marketed product, scheduled for the third quarter of 2024, the stock has soared. Still, Caligan thinks there is a lot more value to be realized.

COPD, known as “smoker’s lung,” is the third leading cause of death worldwide that affects over 380 million patients globally. Not only is this a humanitarian crisis, but a challenge for our health-care systems. In just the U.S. alone, over $24 billion in health-care costs are associated with COPD management. A successful drug like Ohtuvayre would not just increase the life expectancies of patients with COPD, but it would lower costs for both health-care providers and COPD patients. Currently, there are over 8.6 million U.S. COPD patients with over 4 million remaining symptomatic despite treatment from the current commercial therapies.
There is still a huge gap in this market, and Verona is currently on the trajectory of filling it with strong Phase III data showing a significant increase in lung function and a reduction in exacerbations with minimal side effects. This supporting data and the number of unsuccessfully treated patients in the current market suggests that Verona could achieve a 20% patient share for Ohtuvayre. If Verona can get 10% patient share, this could translate into $4.5 billion of revenue for Ohtuvayre. But the story gets even more exciting with potential indication expansion for utilizing Ohtuvayre for non-cystic fibrosis bronchiectasis (“NCFB”), a progressive inflammatory disease that causes permanent lung damage with no current approved therapies and whose symptoms mimic COPD. With a greater than 1 million patient population, this could be a huge avenue for expansion for Ohtuvayre if it were to get approved as an NCFB treatment. The only other potential player in the NCFB market is biopharma peer Insmed’s drug brensocatib. The drug had mediocre success, showing a 21% rate of reduction in exacerbations in Phase III testing. Still, this was enough to skyrocket Insmed’s valuation over $7 billion in one month. In early pooling analysis, Ohtuvayre showed a 41% reduction in exacerbations in COPD patients, almost double brensocatib.
When Caligan announced its Verona position last month, the stock was trading at $33.40 per share or a $2.5 billion enterprise value. If it can attain a 10% patient share for COPD and $4.5 billion of peak revenue, it is trading at one half of peak revenue. Mergers and acquisitions for similar companies are generally done at 3-times to 4-times peak revenue, which would give Verona a price of $115 per share. If Ohtuvayre continues to move through trials for NCFB and gets traction with patients, like Insmed, Caligan thinks that Verona Pharma could be worth 7-times its valuation, or $218 per share.
Caligan exclusively invests in the health-care sector and has seen a lot of success. In October 2023, Caligan announced an activist position in MorphoSys AG, a similarly modeled biopharma company with a Phase III drug, that was set to commercialize in Q4 of 2023. At the time, the stock was trading at 26.08 euros a share. After successfully commercializing its star drug pelabresib, MorphoSys was subsequently sold to Novartis in February 2024 for 2.7 billion euros or 68 euros per share. Caligan learned from that experience that if a drug can improve the standard of care for patients, it will be valuable. In an industry with $140 billion coming off patent relatively soon, larger pharma companies need to do acquisitions, and those deals are usually in the $1 billion to $10 billion range. Both of those points bode very well for Verona, Caligan’s largest position in its portfolio.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

FA Playbook

Financial psychology plays a big role in people’s financial success.
Adopting a “rich” versus “poor” mindset can help anyone become a millionaire, says behavioral finance expert Brad Klontz.

Bernd Vogel | Stone | Getty Images

Brad Klontz was drawn to financial psychology after the tech bubble burst in the early 2000s.
Klontz had tried his hand at stock trading after seeing a friend earn more than $100,000 in one year. But he felt immense shame after the market crashed and his investments evaporated.

He set out to discover why he took such risks and how he could behave differently in the future.
Today, Klontz is a psychologist, a certified financial planner and an expert in behavioral finance. He is a member of the CNBC Financial Advisor Council and the CNBC Global Financial Wellness Advisory Board.
In his estimation, psychology is perhaps the biggest impediment to people’s financial success.

More from FA Playbook:

Here’s a look at other stories impacting the financial advisor business.

Klontz’s new book, “Start Thinking Rich: 21 Harsh Truths to Take You from Broke to Financial Freedom” — co-authored with entrepreneur and social media influencer Adrian Brambila — aims to break down the mental barriers that get in the way of financial freedom.
CNBC chatted with Klontz about these “harsh truths” and why he says people earning a McDonald’s salary can still become millionaires by tweaking their mindset.

The conversation has been edited and condensed for clarity.

‘It’s all about the psychology’

Greg Iacurci: Why is psychology important when it comes to personal finance?
Brad Klontz: The basics of personal finance are actually quite simple. Financial literacy has its place, but I think it’s mostly [about] psychology.
Here’s my argument for that: The average American, the two biggest problems we have is we spend more than we make, and we don’t save and invest for the future. And I’ve literally yet to meet an adult who doesn’t know that they shouldn’t do those two things. So, everybody knows it. Nobody stays broke because they don’t know the difference between a Roth IRA and a traditional IRA. That’s not the problem we have.
It’s not really about the lack of knowledge. I think it’s all about the psychology. 
GI: So how does people’s psychology tend to get in the way?
BK: The biggest impediment: money scripts. Most people aren’t aware of their beliefs around money. And there’s a whole process for discovering what those are. Part of it is looking at your financial flashpoints: these early experiences you have around money or that your parents have had, or your grandparents have had. People tend to repeat the pattern in their family, or they go to the extreme opposite. 

The difference between ‘broke’ and ‘poor’

GI: You write very early in the book that there’s a difference between being broke and being poor. Can you explain the difference? 
BK: We’re talking about a poor mindset.
Being broke means you have no money. I’ve been broke, my co-author was broke, our families have been broke, a lot of people have been broke. We differentiate between being broke, which is a temporary condition, hopefully, to a poor mindset, which will keep you broke forever.

It’s not really related to money, because I know people who make six figures and multiple six figures, and they have a poor mindset. We all know stories of people who win the lottery, or they win a big sports contract or music contract, and then all of a sudden [the money is] gone. Why is it gone? They have a poor mindset. That’s the distinction we make.
GI: Does this suggest that people, no matter their socioeconomic circumstances, can lift themselves out of poverty if they adopt a rich mindset?
BK: Yes.
GI: Is that one of your “harsh truths”?
BK: Yeah. We frame it in different ways based on the [book] chapter titles. For example, “It’s not your fault if you were born poor, but it is your fault if you die poor.” That’s a pretty harsh reality that we’re throwing in people’s face.  

Adopt a ‘rich’ vs. ‘poor’ mindset

GI: What is a rich mindset?
BK: It’s an approach to life and an approach to money.
Some of it goes against our natural wiring. There’s a future orientation. You have to have a vision of the future. A poor mindset [is] really focused on the here and now, not really thinking about the future. And if you don’t have a clear vision of your future, you’re not going to save, you’re not going to invest, you’re not going to live below your means.
A rich mindset puts an emphasis on owning their time versus owning a bunch of stuff. A poor mindset, as we describe it, [is] very willing to trade time for stuff.
GI: What do you mean by that?
BK: A poor mindset is like, I want this fancy car. And I’m very willing to work an extra 10 hours a week so I can drive that car around. And the problem with that is that mindset goes everywhere: “I’m gonna buy the biggest house I can get, I’m gonna get the nicest clothes I can get, a big watch.” And then people have no net worth. They’re not saving any net worth.

Meanwhile, a rich mindset is like: How can I own as much time as possible? You might think of that as retirement, where I don’t need to work anymore to fund my life. They have a future orientation, and they think, “Every dollar I get, I’m taking some of that money and I’m going to put it over here so that I can own my time and eventually have that money fund my entire life.”

One of the ‘most destructive beliefs about money’

GI: I thought this was a great line. You write: “The belief that rich people are big spenders could be one of the most destructive beliefs about money ever.”
BK: I’ve done research on this. In one study, we looked at a group of people who [each] had about $11 million in net worth, and we compared them to a group of people who [each] had about $500,000 in net worth. These people had almost 18 times more money. And what we found is they only spent twice as much, on their house, their vacation, their watch and their car.
They had the money to spend 18 times as much, right? The people who are the wealthiest, when it comes to money scripts [they] have money-vigilant money scripts, which is the belief that it’s important to save.
The ones who are the flashiest spenders [have] “money status beliefs.” They had lower income, lower net worth. They’re more likely to come from poorer homes. It’s like, “I’m gonna show the world I’ve made it.” But that keeps you broke.
And I had it, by the way. All these insults about this poor mindset, I had it all.

How to work at McDonald’s and be a millionaire

GI: So what is the No. 1 thing people can do to save themselves?
BK: The first part is embracing some of these harsh realities: Your political party is not going to save you. Your corporation doesn’t care about you. Your beliefs about money are keeping you poor.
These are all meant, in different ways, to just help you shift from an external locus of control to an internal locus of control: The outcomes I’ve been getting in my life are because of me. It’s because of what I did, what I didn’t do, what I didn’t know. It’s a difficult mindset to grasp.  
You need to wake up to the fact that it doesn’t matter who the president is in terms of your financial freedom. None of them are going to make you financially free. They’re not going to send you a check. Your company? They don’t want you to be financially free. The replacement cost for you is really high. Your teachers can’t teach you to do that. They can teach you history and English. But they’re not financially free themselves.
The bottom line is, you have to do this yourself.
Then the next question is, well, what am I supposed to do? And that’s where we want to get people, because that’s a much easier answer.

Bradley T. Klontz, Psy.D., CFP, is an expert in financial psychology, behavioral finance and financial planning.
Courtesy Bradley T. Klontz

GI: And what is the answer?
BK: The answer is really, really simple.
Here’s the rich mindset: $1 comes into your life; you are going to put a percentage of that towards your financial freedom before you do anything else.
You can work at McDonald’s your entire life and be a millionaire if you have that mindset.

Save 30% of your income — or get a roommate

GI: What is the percentage people should be aiming for?
BK: It just depends on how rich you want to be and how fast you want to be rich. That determines the percentage. You’ll hear personal finance experts say you should be saving and investing at least 10% of everything you make. I advocate for 30%; that’s what I shot for, just because I think it helps you get there faster.
And people are like, “Oh my gosh, 30%.” Well, it’s real easy before you get your first job if you have this mindset. It’s real tough if you’ve designed your entire life around 100% of your paycheck. That’s where you have to make cuts.
We have a chapter on cutting expenses. It’s called “Get a roommate, get on the bus, get sober, get bald, and get a side hustle or shut up about being poor.”
We [hear] this all the time: “I can’t afford to invest.” We’re calling bulls— on it. Yes, you can.
We looked at the average amount that Americans spend on rent, on cars, on going to the salon, and on alcohol. Two thousand dollars a month is average rent; if you have a roommate, it cuts it down to $1,000. Just that alone, if you invested the difference, in 25 years you’d have $1.3 million. Now, if you had three roommates, it would go all the way up to $2 million. Just think about that. You now are a multimillionaire just from that, doing nothing else. And by the way, that’s average market returns.
But then when you add in: Take the bus, stop drinking alcohol, shave your head? [That’s] $2.8 million in 25 years.
GI: If you do all those things?
BK: If you do all those things. That’s just one roommate, riding the bus, not drinking alcohol and not going to the salon — watch YouTube [or] get your friend to cut your hair. The richest people I know, this is the kind of stuff they do. And yeah, $2.8 million.
I would say to you all: That sounds terrible.
OK, so why don’t you just go ahead and invest 30% of every dollar you make? Then you don’t have to do any of that s—. If that’s your mindset, it’s impossible for you not to become a millionaire. Unless you do something stupid, like take your investments and do something crazy. More

ETF Strategist

ETF Street
ETF Strategist

Exchange-traded funds tend to have lower fees relative to mutual funds, according to investment experts.
Fees are one of the few factors that people can control with investing.
ETFs don’t always win on fees, experts said. There are also cheap mutual funds available, largely index funds.

Businessperson reviewing pie charts and data analysis documents in an office setting.
Freshsplash | E+ | Getty Images

The trend is clear: Investors continue to seek out lower fees for investment funds.
The mass migration to cheaper funds has been a key driver of falling costs, according to Zachary Evens, a manager research analyst for Morningstar.  

Average annual fund fees have more than halved in the past two decades, to 0.36% in 2023 from 0.87% in 2004, Evens wrote.
And when it comes to fees, exchange-traded funds often beat their mutual-fund counterparts, experts said.  
The average ETF carries a 0.51% annual management fee, about half the 1.01% fee of the average mutual fund, according to Morningstar data.

More from ETF Strategist

Here’s a look at other stories offering insight on ETFs for investors.

Some experts say comparing average ETF fees to those of mutual funds isn’t quite fair, because most ETFs have historically been index funds, not actively managed funds. Index funds are generally cheaper than active ones, which employ stock-picking tactics to try and beat the market; that means average ETF fees are naturally lower, experts said.
However, there’s a similar fee dynamic when comparing on a more apples-to-apples basis.

To that point, index ETFs have a 0.44% average annual fee, half the 0.88% fee for index mutual funds, according to Morningstar. Similarly, active ETFs carry a 0.63% average fee, versus 1.02% for actively managed mutual funds, Morningstar data show.
Investors pay this fee — a percentage of their fund holdings — each year. Asset managers pull it directly from client accounts.
“There are so many things you can’t control in investing,” said Michael McClary, chief investment officer at Valmark Financial Group. “The one thing you can control is fees.”
“I think it’s one of the key things people should care about,” he said.

‘Cheap mutual funds also exist’

ETFs and mutual funds are similar. They’re both baskets of stocks and bonds overseen by professional money managers, and offer ways to diversify your investments and access a wide range of markets.
ETFs are newer. The first U.S. ETF — the SPDR S&P 500 ETF Trust (SPY), an index fund tracking the S&P 500 stock index — debuted in 1993.
Mutual funds hold more than $20 trillion, about double the assets in ETFs. But ETFs have steadily increased their market share as investor preferences have changed.
While ETFs tend to be cheaper, on average, that’s not to say mutual funds are always more expensive.
“Cheap mutual funds also exist,” said Bryan Armour, director of passive strategies research for North America and editor of the ETFInvestor newsletter at Morningstar.

For example, some index mutual funds, like those that track “major” indexes such as the S&P 500, have competitive fees relative to similar ETFs, Armour said.
“It’s really just the core indexes where mutual funds compete more directly with ETFs on fees,” Armour said. “Other than that, I’d say ETFs are, generally speaking, cheaper.”
And, fees for newly issued mutual funds are declining while those of new ETFs are increasing, data shows.
The “fee gap” between newly launched mutual funds and ETFs shrank by 71% in the last decade, from 0.67% to 0.19%, according to Evens of Morningstar.
That’s largely due to “the emergence of active and alternative ETF strategies, which tend to be pricier than broad index strategies,” he said. More

Alistair Berg | Digitalvision | Getty Images

In the past decade, private investments exploded from $4 trillion to $14 trillion. Primarily led by institutional capital, investors poured money into private markets in their search for differentiated returns and alpha generation. This makes sense as alternative investments have consistently outperformed global public markets on 10-, 15-, and 20-year time horizons.
Now, the investor base is expanding to individuals. Bain estimates that assets under management in alternatives from individuals has risen to around $4 trillion and projects potential growth to $12 trillion in the next decade, a rapid expansion. Adding alternatives to portfolios requires careful consideration and we believe most individuals will opt to work with experienced advisors in that process.

Interested individuals should focus on three big themes in alternatives investing: the longer-term time horizons; sizing investments in amounts that effectively can be put aside; and diversification, across a portfolio and within alternative sleeves. This applies to individuals across wealth categories as new open-end funds expand access for high-net-worth investors.
For more than 20 years, I have been working with ultra-high-net-worth clients focused on growing and preserving their capital by investing in alternatives. We believe private market investments can help clients with the appropriate risk profile build a diversified portfolio. With recent product innovations, the most immediate opportunities will be for investors at higher wealth levels, but those opportunities continue to expand.
As more companies stay private for longer, a portfolio limited to public companies inevitably will miss market opportunities. The universe of U.S. public companies has declined 43% since 1996, while the number of US private equity (PE) backed companies has increased five-fold since 2000. Fewer than 15% of companies with revenues over $100 million are public.
This means individual investors have narrower exposure to growing businesses in the broad economy by investing solely in public markets. We believe this trend of companies choosing to stay private is expected to continue, owing to greater control and flexibility, lower regulatory reporting requirements, and better access to capital.
While private markets offer advantages of broader economic exposure, diversification and alpha generation, it is important to understand their differences from public markets.

Private markets require longer-term capital commitments. This necessitates careful selection of investment vehicles and precise allocation sizing. They are also less efficient than public markets. We stress the value of committing to managers who maintain consistent strategies and methodologies, and who have proven track records of outperforming public markets over time.
Our advice to clients has been, and remains to be, to spread their investments across a variety of alternative asset classes, managers, and funds. For years we have built alternative portfolios for ultra-high net worth clients who can tolerate illiquidity, often in the 20-30% range of overall holdings. High-net-worth investors might look at half of that (10-15%) as a potential target.
We advise clients in traditional closed-end funds to invest through consistent allocations across multiple strategies over time. Sizes should be similar each year. Being consistent and persistent can enhance diversification over “vintage years.”
The introduction of innovative open-end investment vehicles has simplified the investment process for investors across wealth brackets. Unlike traditional closed-end methods involving capital calls and drawdowns, these new vehicles require full capital upfront. Minimums in open-end funds can be significantly lower than traditional closed-end strategies, allowing high-net-worth investors to diversify across fund categories and managers as they grow their alternative exposure.
While they offer a degree of liquidity, individual investors must understand that these vehicles are not truly liquid. In favorable market conditions, when the funds are performing well and attracting more investments, open-end products will allow redemptions, usually on a quarterly basis. However, when a large number of investors wish to withdraw their investments simultaneously, it should be assumed that full liquidity will not be available and account redemption may not be possible.
Individuals should only make commitments in amounts they can afford to have tied up and treat these open-end funds as if they were conventional alternative investments – largely illiquid.
Many newer open-end funds do not yet have significant performance track records, not having been through full cycles, but their managers can have long track records in other structures and strategies. Investors can judge by their resources: how strong are their teams? What are their competitive advantages?
In private credit, it may be sourcing or top-quality credit selection. In other asset classes, such as private equity, top managers may be good at driving company growth organically, fixing problems, and helping companies create operational efficiencies.
Yet it can be hard for individuals to judge all of this. We suggest they work with financial advisors who have access to wealth platforms with proven alternatives managers. With the ability and resources to monitor multiple managers, they can help investors with diversification.
Over time, more opportunities for investors at different wealth levels could increase as retirement providers look to make alternatives available in plans that naturally have long time horizons. As companies stay private for longer, investors seek alpha generation, and the emphasis on portfolio diversification grows, opportunities and access to alternative investments should only continue to expand for individual investors. More

Traders work on the floor of the New York Stock Exchange during the morning trading on November 07, 2024 in New York City. 
Michael M. Santiago | Getty Images

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.
Here’s what CNBC TV’s producers were watching as the Nasdaq Composite and S&P 500 extended their postelection rally, and what’s on the radar for the next session.

Citigroup’s Jane Fraser

On Friday, the bank’s CEO will be on with CNBC TV’s Sara Eisen in the 10 a.m. hour, Eastern.
Citigroup is up nearly 7% in four days. The stock is up 32% so far in 2024.
The stock hit a high on Wednesday but is already 2.8% from that high mark.
JPMorgan Chase, by the way, got a downgrade from Baird. Analyst David George thinks the stock will drop to $200, a roughly 15% decline from Thursday’s close. Year to date, JPM is up about 39%. The stock also hit a high Wednesday but dropped 4.7% from that level. 
“We find that expectations are quite high, with the stock trading at ~2.6x [tangible book value], 15% cap to assets, over 14x 2026 [earnings per share] estimates, and ~10x [pre-provision net revenue] — all close or at all-time highs,” Baird’s George wrote in his research report on JPM. “We know we are fighting the tape here, but believe it makes sense to sell the stock.” 

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Citigroup shares in 2024

IBM

Arvind Krishna, CEO of the tech giant, is also on with Sara Eisen in the 10 a.m. hour.
The stock is 10% from the mid-October high.
IBM is up about 31% so far in 2024.

Bonds and beyond

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The U.S. 10-year Treasury yield in 2024

NRG Energy

The company releases its quarterly report Friday before the bell.
The stock was up 4.3% on Thursday, hitting a new high.
NRG is now up 86% so far in 2024.

Big moves

The relative strength index, or RSI, is one metric traders and investors watch to track how fast and far a stock has moved. Anything above a 70 suggests a stock is overbought, while a result that’s below 30 could mean it’s oversold. These readings don’t necessarily guarantee that a big move is imminent.
After this recent run, 22 of the stocks in the Nasdaq 100 are in the overbought category.
Booking Holdings is at the top of the list. The stock is up 3.6% week to date and up 18% in a month.
Gilead Sciences is second. That stock Is up 9.4% in four days, and it’s gained about 16% in a month.
Five of the 30 stocks in the Dow Industrials are seen as overbought. Goldman Sachs is tops, followed by Visa. 
Goldman Sachs is up 12% in four days. Shares are up roughly 18% in a month.
Visa is up 5.2% in four days. Shares are up 11.7% in a month. More