Weekly Investor – August 29, 2011
Broad-Based Rally
Market Summary:
The major U.S. equity averages all rallied this week, marking the first weekly gain in more than a month. Investor confidence was boosted when Warren Buffet reached out to Bank of America (BAC) on Wednesday and offered to invest $5 billion in exchange for preferred shares and warrants on behalf of his company, Berkshire Hathaway (BRK.A). Mr. Buffet is known as an astute appraiser of value and his confidence in BAC helped lift the stock more than 11% for the week. Additionally, Fed Chairman Ben Bernanke’s Jackson Hole speech noted that although the economic recovery has been less robust than previously hoped, the economy should sustain modest growth without the need for immediate stimulus. Nonetheless, he assured that the FOMC is prepared to employ tools if needed in the future.
A broad-based rally pushed the S&P 500® up 4.7% for the week with all 10 sectors gaining over 2.0%. The top-performing sectors in the S&P 500® Index included Technology (+6.2%) and Consumer Discretionary (+6.0%), while bottom-performing sectors included Utilities (+2.1%) and Consumer Staples (+2.1%). In the fixed-income market, the 10-year Treasury lost ground with the yield ending the week at 2.2%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Profiting from Change
CBS Corporation (CBS) operates a worldwide mass media company and is headquartered inNew York,New York. Founded in 1986, CBS has operations in every field of media including broadcast television, cable television, radio, outdoor advertising, publishing, interactive media, and entertainment.
Recently, a structural change between content providers, such as CBS, and distributors, such as cable and satellite operators, has provided additional profitability for CBS. CBS now has the ability to leverage the value of its content when negotiating retransmission fees. In addition, increased demand for online content from video distributors such as Netflix provide a new and meaningful growth source for CBS. We expect CBS will successfully continue to generate value from its content, therefore creating favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.7% |
| Qualcomm Inc. | 3.9% |
| Google Inc. | 3.9% |
| Energizer Holdings | 3.8% |
| Danaher Corp. | 3.8% |
| Biogen Idec Inc. | 3.8% |
| Gilead Sciences Inc. | 3.7% |
| Allergan Inc. | 3.5% |
| Hansen Natural Corp. | 3.5% |
| EMC Corp. | 3.3% |
U.S. Equity Indices
| Index | 08/26/11 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,284.5 | 4.3% | -2.5% |
| NASDAQ | 2,479.9 | 5.9% | -6.5% |
| S&P 500 | 1,176.8 | 4.7% | -6.4% |
| Russell 1000 G | 550.1 | 5.6% | -4.3% |
U.S. Credit Rates
| Index | 08/26/11 | 08/19/11 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.9% | 0.9% | 2.0% |
| 10 Year T-Note | 2.2% | 2.1% | 3.3% |
| 30 Year T-Bond | 3.5% | 3.4% | 4.3% |
| 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.
