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News & Our Thinking

Weekly Investor

Weekly Investor – August 11, 2014

29 October 2014

 

Rollercoaster Week

Market Summary: 

U.S. equity markets ended the week moderately higher after a volatile week of trading on the heels of geopolitical news. On Monday, stocks opened higher as Portugal announced a bailout of their bank, Banco Espirito Santo SA.  On Thursday, markets retreated to levels not seen since April as tension in Ukraine flared and stole world headlines.  Friday, stock rallied after a Russian news agency announced that the country was seeking to de-escalate the Ukraine conflict.  On the same day, the U.S. announced a strategic bombing of the ISIS militant group who is attempting to take over parts of Iraq.  Among all of the headlines, second quarter earnings season continued and results remained positive as 71% of the 454 companies that have reported, noted higher than expected revenues. Looking ahead, investors hope for good news from Corporate America as well as July reports including retail sales and consumer confidence, both expected next week.

The S&P 500® was down 0.3% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (1.1%) and Basic Materials (1.0%), while bottom-performing sectors included Health Care (-0.6%) and Telecommunications (-2.1%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.4%.

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


Positive Change

The Dow Chemical Company (DOW) manufactures and supplies chemical products for use as raw materials in the manufacture of customer products and services worldwide.  DOW was founded in 1897 and is headquartered in Midland, Michigan.

We have added DOW to our portfolio as the company currently maintains the lowest margins among its peers with plans to increase the margins toward peer levels. Additionally, an activist investor has recently become involved in the company and is championing great change which we believe has the potential to unlock substantial shareholder value. Finally, the revolution in shale gas production provides North American-based chemical producers with a tremendous raw materials cost advantage over global competitors, giving DOW a conducive environment to enact positive changes. For these reasons, we have added DOW to our portfolio as we believe the company offers favorable odds.

Top 10 Equity Holdings


.
Google, Inc. 6.0%
CBS Corp. 4.4%
Danaher Corp. 3.8%
The Dow Chemical Co. 3.7%
SunTrust Banks, Inc. 3.7%
Schlumberger LTD 3.7%
Electronic Arts Inc. 3.6%
F5 Networks, Inc. 3.6%
Lincoln National 3.5%
EMC Corporation 3.5%

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.