News & Our Thinking

Weekly Investor

Weekly Investor – March 11, 2013

12 March 2013

Good News!

Market Summary:  

The U.S. equity markets all posted positive returns last week. In fact, the S&P 500® Index had its second best performing week of 2013 and all five days yielded positive results.  Monday’s comments by Fed Vice Chair, Janet Yallen reinforcing the need for the U.S. central bank’s aggressive stimulus pushed stocks higher.  Additionally, news that the unemployment rate had dropped to its lowest level since 2008 boosted investor confidence.  Overseas, investors shrugged off the uncertainty of the Italian elections and embraced comments by Haruhiko Kuroda, the government nominee for the Bank of Japan that he would attempt to end deflation in the country.  Going forward, investors hope for another positive week.

The S&P 500® closed up 2.2% for the week.  The top-performing sectors in the S&P 500® Index included Financials (3.4%) and Consumer Discretionary (3.2%), while bottom-performing sectors included Utilities (1.2%) and Consumer Staples (1.1%). In the fixed-income market, the 10-year Treasury yield closed up for the week at 2.0%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Turn-Around Strategy

POSTPost Holdings, Inc. (POST) engages in the manufacture, marketing, and distribution of branded ready-to-eat cereals in the United States and Canada. The company was founded in 1897 and is based in St. Louis, Missouri.

POST previously operated as a subsidiary of Ralcorp Holdings Inc. (RAH), a former Argent holding.   However, as of February 2012, POST was spun off from RAH to operate independently as part of a value creating plan to maximize value for shareholders.  We approve of the plan and think highly of POST’s current management team and their ability to drive value creation for shareholders.  Additionally, POST is the number three player among branded cereal companies and possesses strong brands and impressive cash flow generation.  While turn-around efforts will certainly take time, we believe increasing POST’s position within our portfolio creates favorable odds for our clients.

Top 10 Equity Holdings

Google, Inc. 5.4%
Lowes Cos. 4.4%
CBS Corp. 4.3%
Allstate 4.0%
Danaher Corp. 3.9%
Qualcomm Inc. 3.8%
Oracle Corp. 3.7%
Gilead Sciences 3.7%
Suntrust Banks 3.7%
Procter & Gamble 3.5%

U.S. Equity Indices

Index 03/08/13 Week % Chg YTD % Chg
DJIA 14,397.1 2.2% 9.9%
NASDAQ 3,244.4 2.4% 7.4%
S&P 500 1,551.2 2.2% 8.8%
Russell 1000 G 708.6 2.0% 7.7%

U.S. Credit Rates

Index 03/08/13 03/01/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 0.9% 0.7% 0.8%
10 Year T-Note 2.0% 1.8% 1.8%
30 Year T-Bond 3.2% 3.1% 3.0%
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.