News & Our Thinking

(St. Louis Business Journal) 

“Our investment process is highlighting stocks within the industrial sector as being particularly attractive. Industrial firms are categorized as those primarily involved in heavy equipment and manufacturing. With the backdrop of an anemic recovery in the United States, uncertainty abroad and energy companies like Exxon-Mobil hit by plummeting oil prices, looking at Industrials may seem like an odd choice. It certainly surprised many of us around the investment table when we began to research these companies. Industrials are relatively inexpensive, reflecting the skepticism around the economy, and are showing early signs of stability as the energy sector begins its slow recovery. Argent’s portfolio includes Pentair, which Emerson has agreed to buy.” — Ken Crawford, Argent Capital Management, $2.4 billion in managed assets.

September 29, 2016 (Greg Edwards)

With the presidential race unpredictable, terrorism increasingly prevalent and financial markets tentative — including about whether Monsanto’s sale to Bayer will happen — we asked St. Louis money managers what they are telling clients these days about the markets and investments.

“Our investment process is highlighting stocks within the industrial sector as being particularly attractive. Industrial firms are categorized as those primarily involved in heavy equipment and manufacturing. With the backdrop of an anemic recovery in the United States, uncertainty abroad and energy companies like Exxon-Mobil hit by plummeting oil prices, looking at Industrials may seem like an odd choice. It certainly surprised many of us around the investment table when we began to research these companies. Industrials are relatively inexpensive, reflecting the skepticism around the economy, and are showing early signs of stability as the energy sector begins its slow recovery. Argent’s portfolio includes Pentair, which Emerson has agreed to buy.” — Ken Crawford, Argent Capital Management, $2.4 billion in managed assets.

“A number of asset managers and bank stocks appear cheap, but we believe investors should be highly selective in financials, focusing on the few inexpensive stocks of healthier financial services firms, rather than playing the entire sector or broader themes. Our strategy is individual-company focused, not sector focused. We have owned 60 companies in the 16 years I have been running our flagship equity quality return strategy. Many fund managers turn over 60 companies in less than a year. The only St. Louis company we own is Express Scripts and believe the company is being unfairly maligned in the debate on higher drug prices today.” — Nick Tompras, Alpine Capital Research, $3.1 billion in managed assets.

“We see market breadth continue to improve. Indicators such as advance-decline lines are suggesting wide participation across sectors to the upside. One stock, however, that isn’t participating is Monsanto. In spite of an increased bid by Bayer, Monsanto’s share price is far less than the offer price. When we see this type of situation, it’s the market’s way of telling us the deal is unlikely to be consummated. Not only does the deal require American and European regulatory approval, Bayer has to take on an enormous amount of debt to finance the deal.” — Omar Qureshi, Rogers & Co., $250 million in managed assets.

“We like the energy infrastructure companies, with the master limited partnerships and general partnerships paying 8 to 9 percent distributions plus recovery potential as drilling and shipment volumes come back. We also like the large banks, a beneficiary of higher interest rates and universally unloved stocks selling at historic low multiples. In St. Louis, you can make a slight case for Olin, also Belden. We don’t own either one but would become more interested on price pullbacks.” — Joe Terril, Terril & Co., $675 million in managed assets.

“With greater market volatility upon us, investors should improve the diversification of their equity portfolios by owning all the sectors. As economic growth appears to be accelerating based on improving consumer sentiment and spending, we would recommend adding stocks in sectors that benefit, including consumer discretionary, health care and technology. Business spending has been weak but could improve over the next year, helping technology and industrial stocks. We have buy ratings on Lowe’s , Express Scripts, Apple, and Emerson.” — Kate Warne, Edward Jones, $945 billion in managed assets.

“We typically prefer companies with conservative balance sheets, free cash flows after operating expenses and growing sales and market share. One sector we like right now is consumer staples — in particular beverage companies, both alcohol and non-alcohol, and food companies such as candy and cereal. Falling interest rates will benefit those.” — Gerry Sparrow, Sparrow Capital Management, $100 million in managed assets.