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News & Our Thinking

Weekly Investor

Weekly Investor – December 10, 2018

17 December 2018

Trade Concerns Linger

Equities had their worst week since March, falling -4.6%. Two weekends ago, U.S. President Trump and Chinese President Xi had productive trade talks at the G20 summit in Argentina. As a result, equity markets rallied last Monday on news the U.S. would maintain its current 10% tariffs for up to 90 days and China would work to reduce IP theft and its trade imbalance. The reprieve was short lived as the S&P 500® Index traded down the rest of last week. News of the arrest of Huawei’s CFO threw into question progress on U.S./China trade disputes. A more risk-off posture flowed through equity markets and hit Financials particularly hard, pushing them down -7.1% for the week. Insurance names Brighthouse Financial Inc. and American International Group, along with financial services Jefferies Financial Group Inc. and E-Trade Financial Corp., were all down over -10 %.

Looking ahead to this week, U.K. has scheduled a meaningful Brexit vote and U.S. lawmakers should accelerate a government funding bill, but all eyes and ears will remain on U.S.-China trade relations, as rhetoric from both sides are most likely to move equity markets.

The S&P 500 was down -4.6% for the week. Its top-performing sectors were Utilities (1.3%) and Real Estate (0.3%), while bottom-performing sectors were Industrials (-6.3%) and Financials (-7.1%). In the fixed-income market, the 10-year Treasury yield was down, ending at 2.9%.

We continue to seek companies that reflect our Change-BasedSM  investment approach.


Positive Changes

FLIR Systems is the world’s largest commercial company specializing in the design and production of thermal imaging cameras, components and imaging sensors. Its technology takes advantage of temperature differences of objects to help users “see” in situations where lighting is limited or normal vision is impaired by smoke, fog or other conditions. FLIR was founded in 1978 and is headquartered in Wilsonville, Oregon.

Although FLIR has a large exposure to military spending, the company is actively diversifying its portfolio of products via mergers and acquisitions. We view this change in strategy as a long-term positive for the company. In May 2017, FLIR hired James Cannon as its new CEO. Cannon has introduced a new reporting structure and refreshed the executive management team, which should translate into more efficient operations going forward. These events make FLIR a good fit for our Change-BasedSM investment approach.

 

 Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.8%
Post Holdings, Inc. 5.5%
MasterCard, Inc. 4.7%
Red Hat, Inc. 4.3%
JP Morgan Chase & Co. 4.2%

Small Cap Core

Fortinet Inc. 3.1%
Merit Medical Systems 3.0%
Wintrust Financial Corp 2.9%
Planet Fitness, Inc. 2.6%
Amphastar 2.6%

Dividend Select

JPMorgan Chase & Co. 5.8%
Pfizer, Inc. 4.7%
ConocoPhillips 4.2%
Occidental Petroleum 4.0%
Life Storage, Inc. 4.0%

Mid Cap 

Amedisys, Inc. 3.8%
CDW Corporation 3.6%
Cintas Corporation 3.1%
Helen of Troy Ltd. 3.0%
Bright Horizons Family 2.9%


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.