News & Our Thinking

Weekly Investor

Weekly Investor – July 14, 2014

31 July 2014


Contagion Fears Return

Market Summary: 

U.S. equity markets lost ground last week as trouble overseas reignited contagion fears.  Thursday’s announcement that Portugal’s Banco Espirito Santo SA parent company missed a debt payment renewed Eurozone financial system fears.   Additionally, as second quarter earnings began, the market experienced a sell-off as many investors took profits from several high performing sectors.  Biotechnology and internet stocks were hit especially hard.  In U.S. economic news, the June Monthly Budget statement showed that the U.S. budget deficit was the smallest since 2008.  Looking ahead to this week, investors will continue to digest corporate earnings reports and hope for positive news from bellwethers such as Johnson & Johnson, Goldman Sachs and JPMorgan Chase as they are all set to report earnings.

The S&P 500® was down 0.9% for the week.  The top-performing sectors in the S&P 500® Index included Utilities (0.8%) and Telecommunications (0.6%), while bottom-performing sectors included Financials (-1.6%) and Energy (-1.8%). 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.

Favorable Odds

BGBunge Ltd. (BG) engages in agriculture and food business worldwide among four segments: agribusiness, sugar and bioenergy, milling products and fertilizer. Along with food processing, BG is an international exporter of soybeans and participates in grain trading.  The company was founded in 1818 and is headquartered in White Plains, New York.

BG has a new CEO who is implementing a change in strategy.  The new strategy is focused on improving returns through both productivity improvements as well as the potential to exit BG’s existing low return businesses.  We have confidence in BG’s new leadership and feel the changes offer favorable odds for our portfolio.

Top 10 Equity Holdings

Google, Inc. 6.0%
CBS Corp. 4.5%
Suntrust Banks, Inc. 3.9%
Danaher Corp. 3.9%
Schlumberger LTD 3.8%
Electronic Arts Inc. 3.7%
The Dow Chemical Co. 3.6%
Lincoln National 3.5%
Qualcomm Inc. 3.5%
F5 Networks, Inc. 3.4%

U.S. Equity Indices

Index 07/11/14 Week % Chg YTD % Chg
DJIA 16,943.8 -0.7% 2.2%
NASDAQ 4,415.5 -1.6% 5.7%
S&P 500 1,967.6 -0.9% 6.4%
Russell 1000 G 913.6 -1.1% 5.8%

U.S. Credit Rates

Index 07/11/14 07/03/14 12/31/13
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.6% 1.7% 1.8%
10 Year T-Note 2.5% 2.6% 3.0%
30 Year T-Bond 3.3% 3.5% 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.