News & Our Thinking

Weekly Investor

Weekly Investor – April 4, 2017

05 April 2017


Markets End 1Q17 Up

U.S equity markets ended last week in positive territory and the S&P 500® Index returned 0.8%. Investors closed out the first quarter of 2017 with a 6.07% return, marking the best quarterly performance since the fourth quarter of 2015.  In economic news, crude oil advanced 5.48% and closed at $50.85 per barrel as an Energy Information Administration report showed a decline in U.S. refined product stockpiles.  Additionally, U.S. Consumer Confidence came in higher than expected as the Conference Board number jumped to the highest level since December 2000.  Among equities, expectations of a tax reform led investors to increase exposure to less defensive names and the energy, consumer discretionary and material sectors led the way.  Looking ahead, investors will begin to digest earnings reports from Corporate America and hope for good news.

The S&P 500® Index was up 0.8% for the week. The top-performing sectors in the S&P 500® Index included Energy (2.2%) and Consumer Discretionary (1.7%), while bottom-performing sectors included Telecommunications (-0.8%) and Utilities (-1.2%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.4%.

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

Favorable Odds

The Dow Chemical Company (DOW) manufactures and supplies chemical products for use as raw materials in the manufacture of customer products and services worldwide.  DOW was founded in 1897 and is headquartered in Midland, Michigan.

We have added DOW to our portfolio as the company currently maintains the lowest margins among its peers with plans to increase the margins toward peer levels. Additionally, an activist investor has recently become involved in the company and is championing great change which we believe has the potential to unlock substantial shareholder value. A portion of this vision for change was realized in 2015 when DOW announced plans to merge with DuPont (DD).  Finally, the revolution in shale gas production provides North American-based chemical producers with a tremendous raw materials cost advantage over global competitors, giving DOW a conducive environment to enact positive changes.  For these reasons, we have added DOW to our portfolio as we believe the company offers favorable odds.


Top 10 Equity Holdings

Alphabet, Inc. (Google, Inc.) 6.7%
Post Holdings, Inc. 4.4%
Baxter International Inc. 4.1%
ON Semiconductor Corp. 3.9%
CBS Corporation 3.9%
Masco Corporation 3.9%
Skyworks Solutions, Inc. 3.8%
JP Morgan Chase & Co. 3.8%
Marvell Technology Group 3.7%
Lincoln National 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.