News & Our Thinking

Weekly Investor

Weekly Investor – January 5, 2015

06 January 2015


Investors Ring in a New Year

U.S. equity markets ended the last week of the year lower, but still posted solid gains for the year and the S&P 500® Index returned a total of 13.66%.  U.S. economic data was generally negative during the week.  The ISM manufacturing index fell from 58.7 to 55.5, its lowest reading in six months and oil continued its downward descent. Additionally, the consumer confidence index, initial jobless claims and Chicago purchasing manager numbers all came in below estimates.  However, although it was below consensus estimates, consumer confidence did increase to 92.6 in December, nearing levels not seen in seven years.  Overseas, renewed fears of trouble in the Eurozone region frightened investors and Greece headed towards a snap election.  Despite the less than positive week, U.S. equity markets seem poised to extend the six year winning streak.  Improving labor markets, increasing consumer confidence and strong GDP growth all support continued equity market growth in 2015.

The S&P 500® was down 1.5% for the week.  The top-performing sectors in the S&P 500® Index included Energy (-0.7%) and Health Care (-0.7%), while bottom-performing sectors included Consumer Staples (-2.3%) and Technology (-2.5%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.1%.

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

Premium Growth

The Allstate Corporation (ALL) engages in personal property and casualty insurance, life insurance and retirement and investment product businesses in the United States.

ALL’s current strategy is focused on return on equity (ROE) improvements.  While ALL has been successful in executing its ROE strategy, we believe there is room for further improvement.  Home and auto policy prices have been increasing and are approaching rate adequacy.  We believe this provides ALL an opportunity to moderate price increases on policy renewal and therefore improve the renewal rate on existing policies, driving premium growth within the company.  For these reasons, we believe there is upside potential for shares of ALL to outperform.

Top 10 Equity Holdings

Google, Inc. 5.2%
Electronic Arts, Inc. 4.6%
Skyworks Solutions 4.3%
Danaher Corp. 4.0%
CBS Corp. 3.8%
F5 Networks, Inc. 3.8%
Lincoln National 3.7%
Broadcom Corporation 3.7%
JP Morgan Chase & Co. 3.3%
EMC Corporation 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.