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Weekly Investor

Weekly Investor – July 15, 2019

15 July 2019

Record Highs

The S&P 500® Index set multiple record highs last week, closing above 3,000 for the first time on Friday.  The market rose as Federal Reserve Chairman Jerome Powell gave testimony indicating that the central bank likely will cut rates soon. In economic news, inflation readings came in above expectations but remained around the Fed’s target of 2%.

Shares of UnitedHealth, Centene and other managed care names gained following the announcement that the Trump administration will not look to limit drug rebates to pharmacy benefit managers. By contrast, drug makers and healthcare equipment names fell as the administration is likely to look to other ways to reign in healthcare costs. Shares of Costco rose after the company reported strong comparable-store-sales. Shares of Deutsche Bank fell on skepticism over the bank’s newest turnaround plan. Large U.S. banks, including JP Morgan Chase and Morgan Stanley, are likely to gain market share in equity trading with Deutsche Bank shuttering its trading operations. In merger news, Cisco announced the acquisition of Acacia Communications for roughly $2.6 billion. Earnings season is set to start this week with JP Morgan Chase and Goldman Sachs set to report on Tuesday.

The S&P 500 was up 0.8% for the week. Its top-performing sectors were Energy (2.2%) and Communication Services (2.1%), while bottom-performing sectors were Basic Materials (-0.8%) and Health Care (-1.4%). In the fixed-income market, the 10-year Treasury yield was up, ending at 2.1%.

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


Change Based Growth

In mid-2016, Danaher Corporation (DHR) spun off its industrial segments, creating Fortive Corporation (FTV).   Fortive operates as a diversified industrial growth company that focuses on professional instrumentation, automation, sensing and transportation technologies.

Fortive has taken the successful Danaher Business Systems model and applied it to Fortive’s industrial businesses. The company possesses a strong balance sheet and potential to expand its profit margins. In addition, Fortive has the ability to drive organic growth faster than the industrial economy and can supplement that organic growth with selective acquisitions. Since the spinoff, Fortive has made two significant acquisitions. For these reasons, Argent believes Fortive fits our Change-BasedSM investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 7.2%
Mastercard, Inc. 5.6%
Post Holdings, Inc. 5.5%
Marvell Technology Group 4.9%
First Data Corporation 4.6%

Small Cap Core

Fortinet Inc. 3.0%
Planet Fitness, Inc. 2.9%
Upland Software Inc. 2.7%
Wintrust Financial 2.6%
Gray Television Inc. 2.5%

Dividend Select

JPMorgan Chase & Co. 5.7%
Marvell Technology Group 4.4%
Microsoft Corp. 4.3%
Target Corporation 4.0%
Pfizer Inc. 4.0%

Mid Cap 

CDW Corporation 3.9%
Cintas Corporation 3.7%
Bright Horizons Family 3.3%
NVR, Inc. 3.2%
Worldpay, Inc. 3.2%


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.