Weekly Investor – August 5, 2013
A Positive Week
Market Summary:
The U.S. equity markets all closed in positive territory last week. The S&P 500® Index closed above 1700 points for the first time in the index’s history. In fact, since the S&P 500’s low in March of 2009, the index has returned more than 174%, including reinvested dividends. Investors were also happy to hear that the Fed downgraded the outlook for U.S. economic growth from moderate to modest, which provides support for continued stimulus measures. Additionally, former Goldman Sachs trader, Fabrice Tourre was found liable for defrauding investors for his involvement in the failed ABACUS collateralized debt obligation he helped create. The verdict marks one of the few court victories for the SEC resulting from the financial crisis. Finally, earnings season continued with mixed results and investors hope the positive news is here to stay.
The S&P 500® was up 1.1% for the week. The top-performing sectors in the S&P 500® Index included Industrials (2.1%) and Consumer Discretionary (2.0%), while bottom-performing sectors included Energy (-0.3%) and Telecommunications (-0.5%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
Forest Laboratories, Inc. (FRX) develops, manufactures, and sells branded and generic forms of ethical drug products. Founded in 1956 and based in New York, New York, its principal products include Lexapro for the treatment of depression and generalized anxiety disorder; Namenda for the treatment of Alzheimer’s disease; Bystolic for the treatment of hypertension; and Savella for the management of fibromyalgia. FRX sells its products through independent distributors to physicians, pharmacies, hospitals, managed care and other healthcare organizations.
FRX presents a unique opportunity as investors worry about the sustainability of its growth prospects, when its number one selling drug Lexapro goes off-patent. However, FRX has historically proven its ability to successfully navigate growth challenges and currently possesses a strong balance sheet and an extensive pipeline of late-stage products. FRX has numerous opportunities to deliver above average growth and surprise investors, which we believe represents favorable odds for our clients
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.4% |
| CBS Corp. | 4.6% |
| Lowes Cos | 4.6% |
| Gilead Sciences | 4.6% |
| SunTrust Banks | 4.0% |
| Danaher Corp. | 3.9% |
| Forest Laboratories | 3.7% |
| MasterCard, Inc. | 3.6% |
| Citrix Systems, Inc. | 3.5% |
| Qualcomm Inc. | 3.4% |
U.S. Equity Indices
| Index | 08/02/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,658.4 | 0.6% | 19.5% |
| NASDAQ | 3,689.6 | 2.1% | 22.2% |
| S&P 500 | 1,709.7 | 1.1% | 19.9% |
| Russell 1000 G | 780.9 | 1.6% | 18.6% |
U.S. Credit Rates
| Index | 08/02/13 | 07/26/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.4% | 0.8% |
| 10 Year T-Note | 2.6% | 2.6% | 1.8% |
| 30 Year T-Bond | 3.7% | 3.6% | 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.
