Weekly Investor – December 3, 2018
Equities Bounce Back
Equities surged following comments on Wednesday by Federal Reserve chairman Jerome Powell that the current benchmark rate was “just below” neutral, implying the central bank could be close to leaving interest rates steady. As recently as last month, Mr. Powell had said rates were “a long way” from neutral. Along with tariffs, fears of higher interest rates, which could lead to slower growth, remains another key concern for most investors. During the week, trade headlines continued to add volatility to the market in the lead up to the weekend dinner of Presidents Donald Trump and Xi Jinping at the Group of 20 meeting in Brazil. Takeaways from the meeting this weekend are likely to drive sentiment for the week ahead.
In economic news, housing numbers remained disappointing as new home sales came in under expectations for October and continued to soften. Rising costs due to material and labor shortages coupled with higher interest rates have driven down home affordability.
The S&P 500® was up 4.8% for the week. Its top-performing sectors were Consumer Discretionary (6.4%) and Technology (6.1%), while bottom-performing sectors were Basic Materials (2.4%) and Real Estate (1.7%). In the fixed-income market, the 10-year Treasury yield was even, ending at 3.1%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change-Based Investment
Facebook, Inc. (FB) provides various social networking products to connect and share through mobile devices, personal computers, and other devices worldwide. Its solutions include the company’s namesake Facebook website and app, Instagram and WhatsApp Messenger. Facebook was founded in 2004 and is headquartered in Menlo Park, California.
Overall, negative news has done little to change Facebook user behavior. New users continue to subscribe at a pace similar to the past and advertisers continue to bid up prices they are willing to pay for ads, indicating that the reach and frequency Facebook provides is increasingly valuable relative to other options to reach consumers. While it is impossible to know the impact of future regulation on Facebook’s business model, we believe the company’s growth prospects remain bright. As such, we believe Facebook represents a good holding for Argent’s Large Cap strategy.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 7.9% |
| Post Holdings, Inc. | 5.6% |
| MasterCard, Inc. | 4.5% |
| JP Morgan Chase & Co. | 4.3% |
| Fortive Corporation | 4.1% |
Small Cap Core
| Merit Medical Systems | 3.0% |
| Fortinet Inc. | 3.0% |
| Wintrust Financial Corp | 2.9% |
| Planet Fitness, Inc. | 2.6% |
| Amphastar | 2.4% |
Dividend Select
| JPMorgan Chase & Co. | 5.9% |
| Pfizer, Inc. | 4.7% |
| ConocoPhillips | 4.2% |
| Occidental Petroleum | 4.0% |
| Microsoft Corp. | 3.7% |
Mid Cap
| Amedisys, Inc. | 3.7% |
| CDW Corporation | 3.5% |
| Cintas Corporation | 3.2% |
| Helen of Troy Ltd. | 2.9% |
| 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.
