Weekly Investor – November 7, 2016
What Comes Next?
U.S. equity markets ended the week down and the S&P 500® Index continued the previous week’s decline, returning -1.9%. Weakness in foreign markets and uncertainty surrounding the upcoming U.S. Presidential election caused market volatility. Additionally, expectations of a December rate hike increased after the Federal Open Market Committee left rates unchanged as anticipated. U.S. initial jobless claims of 265k disappointed as the report came in above consensus expectations of 256k. However, these levels are the lowest in several decades. Finally, crude oil closed the week at $44.07 per barrel, declining 9.51% from the previous week’s close. Looking ahead to this week, investors eagerly await the results of the election! Stay tuned…
The S&P 500® Index was down 1.9% for the week. The top-performing sectors in the S&P 500® Index included Basic Materials (-0.6%) and Utilities (-1.1%), while bottom-performing sectors included Telecommunications (-2.3%) and Technology (-2.9%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 1.8%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
New Management Team
Marvell Technology Group Ltd. (MRVL) designs, develops and markets analog, mixed-signal, digital signal processing, embedded and standalone integrated circuits. MRVL is the market leader in data storage solutions and end clients include computer manufacturers, automobile makers, major mobile networks and internet retail and server sites. MRVL was founded in 1995 and is headquartered in Hamilton, Bermuda.
Over the past year, the share price of MRVL was hit substantially due to market share loss within the company’s main business segment. Additionally, MRVL suffered an accounting issue in September of 2015 and had to delay filings in order to conduct an investigation into the issue. In February 2016, activist investor Starboard Value joined MRVL and has since replaced the senior management team, including the CEO. Since the induction of the new management team, MRVL has successfully completed the accounting investigation and is up to date on all SEC filings. We believe the addition of Starboard along with the new management team positions MRVL for stabilized revenue and improved profitability in the near-term. As long-term investors we also believe in the potential for sustained growth at MRVL. For these reasons, we have added MRVL to our portfolio.
Top 10 Equity Holdings
|Alphabet, Inc. (Google, Inc.)||7.2%|
|Post Holdings, Inc.||4.4%|
|Baxter International Inc.||4.4%|
|ConAgra Foods, Inc.||4.3%|
|Red Hat, Inc.||3.5%|
|ON Semiconductor Corp.||3.4%|
|JP Morgan Chase & Co.||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.