Weekly Investor – February 24, 2014
Acquisitions Rule the Day
Market Summary:
U.S. equity markets were relatively unchanged last week amidst a bevy of mixed economic reports. Homebuilder confidence and manufacturing numbers were down as the effects of poor weather begin to be reflected. Release of the Federal Reserve minutes tamed any speculation that the taper would be pulled back but did suggest that the Fed’s policy to keep rates low may be modified in the near future. In stock news, equity markets received a boost from acquisitions. Pharmaceutical maker, Actavis (ACT), announced plans to purchase Forest Laboratories (FRX) in a $25 billion deal. Shares of Actavis and Forest Laboratories advanced 13.8% and 35.7%, respectively. Also, announcing plans was Signet Jewelers who will acquire Zales in a $1.4 billion deal. Looking ahead, equity investors will make their way through the end of earnings season and hope the good news continues.
The S&P 500® was down 0.1% for the week. The top-performing sectors in the S&P 500® Index included Health Care (0.9%) and Utilities (0.7%), while bottom-performing sectors included Consumer Staples (-0.7%) and Financials (-0.9%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.7%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Opportunity for Growth
F5 Networks, Inc. develops and sells application delivery networking products which optimize the security, performance and availability of network applications, servers and storage systems. FFIV was founded in 1996 and is headquartered in Seattle, Washington.
We have added FFIV to our portfolio as we believe the company is well positioned to benefit from the accelerating growth of mobile internet traffic. FFIV’s products help manage and protect traffic networks, enabling users more efficient and secure internet usage. Additionally, FFIV recently partnered with Cisco (CSCO) in order to provide a joint enterprise application which will improve deployment times for key business applications. With its superior technology and market share leader position, we believe FFIV has the potential to deliver higher than expected profits and growth going forward, offering favorable odds to our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.3% |
| CBS Corp. | 4.9% |
| Endo Health Solutions | 4.5% |
| Danaher Corp. | 3.8% |
| SunTrust Banks, Inc. | 3.7% |
| MasterCard, Inc. | 3.7% |
| Amgen Inc. | 3.6% |
| Post Holdings, Inc. | 3.6% |
| Forest Laboratories | 3.5% |
| Qualcomm Inc. | 3.4% |
U.S. Equity Indices
| Index | 02/21/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,103.3 | -0.3% | -2.9% |
| NASDAQ | 4,263.4 | 0.5% | 2.1% |
| S&P 500 | 1,836.3 | -0.1% | -0.7% |
| Russell 1000 G | 867.8 | 0.2% | 0.5% |
U.S. Credit Rates
| Index | 02/21/14 | 02/14/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.5% | 1.5% | 1.8% |
| 10 Year T-Note | 2.7% | 2.7% | 3.0% |
| 30 Year T-Bond | 3.7% | 3.7% | 4.0% |
| 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.
