Weekly Investor – March 19, 2012
March Madness
Market Summary:
The major U.S. equity markets all surged higher last week as the majority of banks returned better than expected results in response to the Fed’s stress tests. Financials rallied in response to the news as several financial institutions announced dividend increases and stock repurchases as a way to return capital back to shareholders. The Fed’s reference to an improvingU.S.economy also had a dramatic impact on the markets as stocks rallied, bonds rose and the price of gold fell. Additionally,U.S. economic data continued its positive climb with retail sales, employment data and housing standing out last week. While investors still have a number of potential risks to worry about, the week’s madness and bullish run was a welcome relief.
The S&P 500® closed up 2.4% for the week. The top-performing sectors in the S&P 500® Index included Financials (+5.9%) and Industrials (+3.2%), while bottom-performing sectors included Utilities (-0.5%) and Consumer Staples (+0.9%). In the fixed-income market, the 10-year Treasury closed with little change for the week at 2.3%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Rising Above the Tide
Franklin Resources Inc. (BEN) provides investment services primarily through its own family of retail mutual funds. Founded in 1947 and based inSan Mateo,CA, BEN also manages separate accounts, which it markets to institutions, high-net-worth families, individuals, and retirement plans, both in theUnited Statesand internationally. BEN’s products are sold to the public under well-recognized brand names such as Franklin, Templeton, Mutual Series, Bissett and Fiduciary.
With a well balanced portfolio of equity and fixed-income products, BEN successfully navigated the financial crisis. Good performance of its products and successful expansion into markets outside of theUnited States has resulted in consistent net inflow of assets under management. As equity markets slowly recover around the world, we believe investors will become incrementally more comfortable with equity investments and BEN is well positioned to benefit. Furthermore, at its current valuation, we believe little of these upsides are priced-in, thus representing favorable odds.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 4.9% |
| Qualcomm Inc. | 4.2% |
| Jabil Circuit Inc. | 4.1% |
| Biogen Idec Inc. | 4.0% |
| Monster Beverage | 4.0% |
| Danaher Corp. | 3.9% |
| Google Inc. | 3.7% |
| Gilead Sciences Inc. | 3.6% |
| EMC Corp. | 3.5% |
| CBS Corp. | 3.3% |
U.S. Equity Indices
| Index | 03/16/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 13,232.6 | 2.4% | 8.3% |
| NASDAQ | 3,055.3 | 2.2% | 17.3% |
| S&P 500 | 1,404.2 | 2.4% | 11.7% |
| Russell 1000 G | 659.9 | 2.2% | 13.6% |
U.S. Credit Rates
| Index | 03/16/12 | 03/09/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.1% | 0.9% | 2.0% |
| 10 Year T-Note | 2.3% | 2.0% | 3.3% |
| 30 Year T-Bond | 3.4% | 3.2% | 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.
