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Weekly Investor

Weekly Investor – February 24, 2020

24 February 2020

Earnings Season Winds Down

Last week stocks seesawed as the S&P 500® Index closed Wednesday at an all-time high, only to finish the week down 1.3%. Coronavirus fears struck the market, pushing investor out of stocks and into safer assets. Evidence for this shift include the 30-year US Treasury yield hitting an all-time low, gold soaring to $1,644 an ounce, the highest level since early 2013 and the Real Estate, Consumer Staples and Utilities sectors leading the market. Corporate earnings season wound down as 50 companies in the S&P 500 announced quarterly results, bringing the total announcements so far to 429.

In stocks, Deere & Company was up over 5.5% last week after announcing an unexpected increase in earnings as a surge in its U.S. farm business offset a slowdown in its construction segment. WalMart Inc. announced revenue and earnings generally in line with expectations. Investors bid up the stock 0.6% for the week. On the other side of earnings, recently combined ViacomCBS Inc. dropped 19.2% after its first post-merger earnings announcement was below expectations. The top-performing stock in the S&P 500 Index was E*Trade Financial Corporation up over 20.7% after Morgan Stanley agreed to buy the online stock trading platform in a deal valued near $13B. Looking ahead to this week, global virus concerns will likely continue to impact markets.

The S&P 500 Index was down 1.3% for the week. Its top-performing sectors were Real Estate (0.0%) and Consumer Staples (-0.1%), while the bottom-performing sectors were Financials (-1.3.%) and Technology (-2.5%). In the fixed-income market, the 10-year Treasury yield was down, ending at 1.5%.

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


Change Based Investment

Huntsman Corporation manufactures chemicals for the international plastics, automotive and construction industries. Based in The Woodlands, Texas, Huntsman was founded by Jon Huntsman Sr. in 1970.

Since late 2016, Huntsman has slowly been transforming itself from a commodities chemical company into a specialty chemicals company. Successful completion of this change should drive higher profits and a higher valuation for the company. Huntsman began this transformation with the partial spinoff of its commodity and pigments business – Venator – announced in late 2016. We expect Huntsman will continue to adjust its product mix over time with the goal of becoming a specialty manufacturer. Huntsman’s stock has fallen of late on concerns over a slowdown in the global economy. Concerns of a slower world economy have pressured chemical pricing, negatively impacting Huntsman’s recent results. Over the long term, with little debt and a management team allocating its assets to drive shareholder return, we believe Huntsman fits our Change-BasedSM investment approach.

 

Top 5 Equity Holdings


Large Cap Growth

Alphabet Inc. (Google) 8.3%
Mastercard, Incorporated 6.0%
Fiserv, Inc. 5.2%
Apple, Inc. 4.8%
Post Holdings, Inc. 4.7%

Small Cap Core

OneMain Holdings, Inc. 3.1%
Atkore International Group 3.0%
Fortinet, Inc. 2.9%
UFP Technologies, Inc. 2.7%
Upland Software, Inc. 2.5%

Dividend Select

JPMorgan Chase & Co. 6.3%
Microsoft Corporation 5.2%
Target Corporation 5.0%
Life Storage, Inc. 3.8%
Eaton Corporation Plc 3.8%

Mid Cap 

Amedisys, Inc. 4.3%
CDW Corporation 4.1%
Cintas Corporation 4.1%
Copart, Inc. 3.5%
NVR, Inc. 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.