News & Our Thinking

Weekly Investor

Weekly Investor – August 12, 2013

13 August 2013

A Mixed Week

Market Summary:  

U.S. equity markets retreated from their all-time highs last week upon the heels of mixed economic data and further speculation surrounding tapering by the Federal Reserve.  Stocks began the week lower as a Fed official indicated that the central bank was closer to slowing its quantitative easing program than previously thought.  U.S. trade deficit was at its lowest point since 2009 and home price growth was at a seven year high. Additionally, Bloomberg reported that of the 446 S&P 500® stocks that have reported earnings, approximately 72% have surpassed expectations. Looking forward, investors hope for more positive earnings news and results from major economic reports including, retail sales, jobless claims and consumer confidence.

The S&P 500® was down -1.1% for the week.  The top-performing sectors in the S&P 500® Index included Basic Materials (0.9%)  and   Consumer Staples (-0.5%), while bottom-performing sectors included Financials (-1.9%) and Telecommunications (-2.5%). 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.

New Sources of Profitability

GCIGannett Co., Inc. (GCI) operates as a media and marketing solutions company in the United States and internationally.  The company was founded in 1906 and is headquartered in McLean, Virginia.  GCI operates in three segments: publishing, digital and broadcast.

GCI recently announced the acquisition of TV station owner, Belo Corp.  Once the acquisition is finalized, two-thirds of GCI’s profits will be driven from TV stations and digital revenue, transforming GCI.  The deal will increase GCI’s exposure to structural changes occurring in broadcast as stations benefit from a new revenue source known as retransmission fees.  The acquisition is highly attractive to shareholders of GCI as it offers a platform of opportunity for the future.  With strong cash flows and an attractive valuation, GCI offers favorable odds to our clients.

Top 10 Equity Holdings

Google, Inc. 5.4%
Lowes Cos 4.7%
CBS Corp. 4.6%
Gilead Sciences 4.4%
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 08/09/13 Week % Chg YTD % Chg
DJIA 15,425.5 -1.5% 17.7%
NASDAQ 3,660.1 -0.8% 21.2%
S&P 500 1,691.4 -1.1% 18.6%
Russell 1000 G 773.8 -0.9% 17.6%

U.S. Credit Rates

Index 08/09/13 08/02/13 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 3.6% 3.7% 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.