Weekly Investor – February 3, 2020
Early January Gains Erased
The S&P 500® Index delivered its worst performance of 2020 last week with a drop of 2.1%.
Although earlier in the month equity markets appeared to carry momentum from the positive developments in the trade agreement, they quickly reversed as reports of the coronavirus, which originated in Wuhan, China, began to emerge. The index displayed trading volatility throughout the week reflecting investors’ uncertainty on how the virus epidemic will affect global economic growth as commercial flights and freight to and from China significantly declined. Crude oil also felt the weight on potential declines in fuel demands and closed at $51.56 per barrel on Friday, declining 4.9% for the week.
The S&P 500 Index was down 2.1% for the week. Its top-performing sectors were Utilities (0.8%) and Consumer Discretionary (0.1%), while the bottom-performing sectors were Basic Materials (-3.5.%) and Energy (-5.6%). 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
FLIR Systems, Inc. is the world’s largest commercial company specializing in the design and production of thermal imaging cameras, components and imaging sensors. It is a technological leader in infrared 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 and provide favorable prospects for long-term growth.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.3% |
| Mastercard, Incorporated | 5.8% |
| Fiserv, Inc. | 5.4% |
| Apple, Inc. | 5.0% |
| Post Holdings, Inc. | 4.9% |
Small Cap Core
| Fortinet, Inc. | 3.3% |
| Atkore International Group | 2.9% |
| OneMain Holdings, Inc. | 2.7% |
| Callaway Golf Company | 2.6% |
| World Fuel Services | 2.5% |
Dividend Select
| JPMorgan Chase & Co. | 6.3% |
| Microsoft Corporation | 5.1% |
| Target Corporation | 4.9% |
| Fidelity National Financial | 4.0% |
| Life Storage, Inc. | 3.8% |
Mid Cap
| CDW Corporation | 4.2% |
| Amedisys, Inc. | 4.1% |
| Cintas Corporation | 4.0% |
| Copart, Inc. | 3.8% |
| NVR, Inc. | 3.3% |
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.
