Weekly Investor – October 24, 2016
A Busy Week
U.S. equity markets traded slightly up last week amid a busy week of corporate earnings, economic news and significant merger and acquisition stories. AT&T officially agreed to acquire Time Warner which if approved, will create a company with a market cap of approximately $300 billion and be one of the largest five publicly traded companies in the world. In economic news, September housing starts saw a 9% decline from the previous month and an 11.9% decline when compared to the prior year. These were below expectations and driven by a drop in multi-family starts as single-family starts have increased over the same periods. In contrast, existing home sales rose 3.2% in September as first-time buyer demand witnessed an uptick. Looking ahead to this week, investors will continue to digest earnings and hope for continued positive news from Corporate America.
The S&P 500® Index was up 0.4% for the week. The top-performing sectors in the S&P 500® Index included Basic Materials (1.6%) and Financials (1.2%), while bottom-performing sectors included Consumer Staples (-0.4%) and Telecommunications (-3.8%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 1.7%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Demand for Products
Lincoln National Corp. (LNC) engages in multiple insurance and retirement businesses within the United States and sells a range of wealth protection, accumulation and retirement income products and solutions. LNC was founded in 1904 and is headquartered in Radnor, Pennsylvania.
Similar to its industry peers, LNC’s profit has been significantly impacted by the low interest rate environment. However, improving economic signals are currently leading the Federal Reserve to slowly reverse its monetary policy. This change should lead to a gradual climb in interest rates and thus a much improved operating environment for LNC. Additionally, the improving U.S. economy indicates higher potential demand for LNC’s products. We believe LNC is well positioned to benefit from steady U.S. economic improvement and offers favorable odds to our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 7.4% |
| Post Holdings, Inc. | 4.6% |
| Baxter International, Inc. | 4.4% |
| Masco Corporation | 4.3% |
| ConAgra Foods, Inc. | 4.3% |
| CBS Corporation | 3.7% |
| Red Hat, Inc. | 3.5% |
| Danaher Corp. | 3.5% |
| Skyworks Solutions, Inc. | 3.4% |
| ON Semiconductor Corp. | 3.4% |
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.
