News & Our Thinking

Weekly Investor

Weekly Investor – August 26, 2013

29 August 2013

Stopped Short!

Market Summary:  

U.S. equity markets ended the week mixed. The mostly quiet week was disrupted Thursday when the Nasdaq closed for three hours.  While exchange officials are not releasing many details, they did concede that it was necessary to close trading in order to prevent “informational asymmetry” among traders when some investors were unable to view quotes.  In addition, debate over the status of the Federal Reserve’s Quantitative Easing program continued as Fed meeting minutes revealed that policy makers are “broadly comfortable” with a plan to trim bond purchases.  In economic news, U.S. July New Home Sales missed expectations by a wide mark, falling -13.4% from the previous month while the U.S. Leading Indicators index showed improvement.  This week, investors prepare to digest more major economic reports and once again look for any signals of tapering by the Fed.

The S&P 500® was up 0.5% for the week.  The top-performing sectors in the S&P 500® Index included Basic Materials (1.0%)  and  Technology (0.9%), while bottom-performing sectors included Financials (0.1%) and Consumer Staples (-0.2%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.8%.

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

Searching for Growth

GOOGGoogle, Inc. (GOOG) has achieved worldwide name recognition with its famed Google search engine. Beyond this well-known service, the technology company also provides targeted advertising solutions (Google AdSense), a checkout service for merchants (Google Checkout), collaboration tools for organizations (Google Apps), and a host of additional online utilities such as Google Maps, Google Video, Google Docs, Google Toolbar, Google Desktop, Google Reader, and of course Gmail. This Mountain View, California based company was founded in 1998, and prides itself on maintaining a corporate culture that encourages creativity and community.

We believe the current trend of allocating additional advertising dollars to internet search ads will continue, and that GOOG is well-positioned to benefit from this trend. With its sophisticated search engine, GOOG is able to proficiently match buyers to providers. Providers recognize the attractiveness of this service and are willing to pay for it accordingly. Recently, near-term economic conditions have placed pressure on GOOG’s stock, which has opened the door for long-term investors such as our clients. We believe the company will outperform its peers over the next three to five years.

Top 10 Equity Holdings

Google, Inc. 5.3%
Lowes Cos 4.9%
CBS Corp. 4.6%
Gilead Sciences 4.5%
Danaher Corp 4.0%
SunTrust Banks 4.0%
Forest Laboratories 3.6%
MasterCard, Inc. 3.6%
Citrix Systems, Inc. 3.6%
Qualcomm, Inc. 3.5%

U.S. Equity Indices

Index 08/23/13 Week % Chg YTD % Chg
DJIA 15,010.5 -0.5% 14.5%
NASDAQ 3,657.8 1.5% 21.1%
S&P 500 1,663.5 0.5% 16.6%
Russell 1000 G 765.0 1.1% 16.2%

U.S. Credit Rates

Index 08/23/13 08/16/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.6% 1.4% 0.8%
10 Year T-Note 2.8% 2.6% 1.8%
30 Year T-Bond 3.8% 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.