News & Our Thinking

Weekly Investor

Weekly Investor – October 28, 2013

28 October 2013

A Treat for Investors

Market Summary:  

U.S. equity markets continued their positive trend last week as all major indices posted positive returns.  The S&P 500® Index has returned 4.76% for the month of October thus far, making it the third best month of the year.  Last week, investors weighed the results of various economic data and earnings reports.  On Tuesday, disappointing non-farm payroll data increased expectations of maintained stimulus efforts by the Federal Reserve.  Thursday, U.S. initial jobless claims came in at 350k, lower than the previous week but still higher than consensus estimates of 340k.  Finally, the week ended on a high note Friday when the S&P 500 reached a new high of 1759.7.  This week, investors look forward to several earnings reports and hope for more treats than tricks!

The S&P 500® was up 0.9% for the week.  The top-performing sectors in the S&P 500® Index included Industrials (2.2%) and Utilities (2.0%), while bottom-performing sectors included Energy (-0.1%) and Financials (-0.3%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.5%.

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

Turn-Around Effort

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. 6.0%
Lowes Cos 5.1%
Gilead Sciences 5.1%
CBS Corp. 5.0%
Danaher Corp. 4.1%
Master Card, Inc. 4.0%
Forest Laboratories 3.8%
Amgen Inc. 3.8%
SunTrust Banks 3.8%
Schlumberger LTD 3.5%

U.S. Equity Indices

Index 10/25/13 Week % Chg YTD % Chg
DJIA 15,570.3 1.1% 18.8%
NASDAQ 3,943.4 0.7% 30.6%
S&P 500 1,759.8 0.9% 23.4%
Russell 1000 G 821.1 1.1% 24.8%

U.S. Credit Rates

Index 10/25/13 10/18/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.3% 1.3% 0.8%
10 Year T-Note 2.5% 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.