Weekly Investor – Aug. 23, 2010
Taking Stock
Market Summary:
The major U.S. equity averages ended the week with mixed results. Investors are taking a wait-and-see approach as economic data from last week presented a mixed picture. The Fed’s plan to repurchase Treasuries as a way to aid the economy created positive momentum for the market at the beginning of the week. In addition, a series of M&A announcements, such as Intel’s intention to acquire McAfee for $7.7 billion and BHP Billiton’s hostile bid for Potash Corp of Saskatchewan, were positive signs that companies flush with cash may accelerate the pace of investment. However, employment and housing data continued to show signs of weakening while inflation remained low, and the resulting concerns of a slowing recovery offset most of the week’s gains.
Over the past week, top-performing sectors in the S&P 500® Index included Technology (+0.7%) and Basic Materials (+0.6%), while bottom-performing sectors included Energy (-2.3%) and Financials (-1.7%). In the fixed-income market the 10-year Treasury remained at the same level during the week with yield ending the week at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Potential for Higher than Expected Growth
Biogen Idec Inc. (BIIB) develops, manufactures and brings to market therapies for multiple sclerosis, rheumatoid arthritis and lymphoma. BIIB also has numerous products in the pipeline for treating complications such as hyponatremia, or a deficiency of sodium in the blood. The company currently offers four products: Avonex, Rituxan, Tysabri and Fumaderm.
Upcoming catalysts that should help garner attention from investors include the expansion of its lead oncology drug, Rituxan, as well as the continued penetration of its next-generation MS drug, Tysabri. While Wall Street remains skeptical of BIIB’s ability to deliver growth into the next decade, feedback from our Main Street contacts gives us added confidence in the company’s ability to continue delivering innovative medical treatments.
Top 10 Equity Holdings
| Cisco Systems Inc. | 4.4% |
| Newell Rubbermaid Inc. | 3.9% |
| Google Inc. | 3.9% |
| Starwood Hotels | 3.9% |
| Energizer Holdings | 3.7% |
| Danaher Corp. | 3.6% |
| Biogen Idec Inc. | 3.4% |
| MasterCard Inc. | 3.3% |
| Allergan Inc. | 3.3% |
| FactSet Research Sys. | 3.2% |
U.S. Equity Indices
| Index | 08/20/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,213.6 | -0.9% | -2.1% |
| NASDAQ | 2,179.8 | 0.3% | -3.9% |
| S&P 500 | 1,071.7 | -0.7% | -3.9% |
| Russell 1000 G | 479.4 | -0.1% | -4.2% |
U.S. Credit Rates
| Index | 08/20/10 | 08/13/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.2% | 0.2% | 0.1% |
| 5 Year T-Note | 1.5% | 1.4% | 2.6% |
| 10 Year T-Note | 2.6% | 2.6% | 3.8% |
| 30 Year T-Bond | 3.7% | 3.7% | 4.6% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
