Weekly Investor – June 20, 2016
Idle Investors
U.S. equity markets posted negative returns last week. Investors were cautious as they began the week in anticipation of economic data including retail sales and industrial production as well as any announcements from the Federal Reserve’s Wednesday meeting. May’s reported retail sales were higher than expected but industrial production was slightly worse than expected. The Fed took a dovish stand on Wednesday and lowered expectations for interest rate increases this year. Additionally, Chairwoman Janet Yellen stated that the Brexit vote was one of the leading factors in the decision not to raise rates. Investors are growing uncertain over this week’s vote as to whether or not Great Britain should leave the European Union. Looking ahead, investor will pay close attention to the Brexit vote and consumer sentiment readings.
The S&P 500® Index was down 1.2% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (1.4%) and Utilities (0.7%), while bottom-performing sectors included Technology (-1.9%) and Health Care (-2.1%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 1.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Significant Change
Baxter International Inc. (BAX) develops, manufacturers, and markets products that save and sustain the lives of people with chronic and acute medical conditions through its subsidiaries. BAX applies its expertise in medical devices to create products that advance patient care worldwide.
After years of underperformance, BAX is undergoing significant change. Recently, BAX spun off its bioscience division, Baxalta, to focus more on its core supply and device businesses. The company also announced the hiring of Jose Almeida to take over as its new CEO. Jose’s track record while running Covidien included accelerating growth and profitability at the company, two key elements to unlock shareholder value at BAX in our view.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 6.6% |
| Post Holdings, Inc. | 6.1% |
| Danaher Corp. | 4.4% |
| ConAgra Foods, Inc. | 4.3% |
| Masco Corporation | 4.2% |
| Baxter International, Inc. | 4.2% |
| Red Hat, Inc. | 3.6% |
| CBS Corporation | 3.6% |
| Wynn Resorts Ltd. | 3.6% |
| The Hain Celestial Group | 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.
