Weekly Investor – March 3, 2014
Acquisitions Rule the Day
Market Summary:
Stocks were off to the races on Monday as investors cheered merger and acquisition activity. This was short lived however, as stock prices fell on Tuesday as consumer confidence took a surprise dip. The release of surging new home sales and better than expected earnings from retailers helped bring stock prices back up by midweek. After wavering slightly Thursday morning, stocks fought back to end higher following Fed Chair Janet Yellen’s testimony on Capitol Hill in which she acknowledged that even though recent economic data has been lackluster, the taper would continue. Friday began with stock prices shooting higher, however, rumors of Russian action in Ukraine ended the day with modest gains. For the week, all three of the major indices racked up decent gains with the S&P closing at an all-time high. Looking ahead, investors will keep a close eye on upcoming economic releases and hope that tension eases in Eastern Europe.
The S&P 500® was up 1.3% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (2.4%) and Basic Materials (1.8%), while bottom-performing sectors included Telecommunications (-0.5%) and Utilities (-0.5%). 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.
Favorable Odds
Gannett 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 completed the acquisition of TV station owner, Belo Corp. Now that the acquisition is final, 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. | 6.3% |
| CBS Corp. | 4.9% |
| Endo Health Solutions | 4.5% |
| Danaher Corp. | 3.8% |
| SunTrust Banks, Inc. | 3.7% |
| Amgen, Inc. | 3.6% |
| Post Holdings, Inc. | 3.5% |
| Forest Laboratories | 3.5% |
| Lincoln National | 3.5% |
| Qualcomm Inc. | 3.4% |
U.S. Equity Indices
| Index | 02/28/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,321.7 | 1.4% | -1.5% |
| NASDAQ | 4,308.1 | 1.0% | 3.1% |
| S&P 500 | 1,859.5 | 1.3% | 0.6% |
| Russell 1000 G | 880.1 | 1.4% | 1.9% |
U.S. Credit Rates
| Index | 02/28/14 | 02/21/14 | 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 | 3.6% | 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.
