Weekly Investor – March 16, 2020
Market Volatility
Stock volatility was on full display last week. Friday’s 9% rally eclipsed a record set in October 2008. One day earlier, the S&P 500® Index had its biggest down day since 2008 after dropping 9%. On Friday, President Trump declared a national emergency and congress announced a bill to stem the coronavirus epidemic. Earlier in the week, the World Health Organization officially declared COVID-19 a pandemic. Reacting to that, President Trump restricted travel from European nations.
Energy was the worst-performing sector last week after crude oil fell over 19%. Oil and natural gas driller Apache Corp. fell, to end the week 60% lower. To support the credit markets, the Federal Reserve announced on Thursday it would inject $1.5 trillion into the economy to combat “highly unusual disruptions.” This week investors will continue to focus on the growth of new COVID-19 cases and the policies designed to identify and quell the outbreak.
The S&P 500 Index was down 8.8% for the week. Its top-performing sectors were Technology (-5.2%) and Health Care (-6.7%), while the bottom-performing sectors were Utilities (-14.3%) and Energy (-24.3%). In the fixed-income market, the 10-year Treasury yield was up, ending at 0.9%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Marvell Technology Group Ltd. designs, develops and markets semiconductors. Marvell is the market leader in data storage solutions. Customers include computer manufacturers, automobile makers, major mobile networks and internet retail and server sites. Marvell was founded in 1995 and is headquartered in Hamilton, Bermuda.
Activist investor Starboard has brought dramatic changes to Marvell since early 2016. Starboard forced our Marvell’s management team and brought in a new CEO, Matt Murphy. Murphy had a solid track record prior to taking over Marvell and has quickly put together a new management team of successful industry veterans. Since Murphy’s arrival, Marvell has delivered significant improvements to profits by implementing discipline on costs and product portfolios and focus on research and development spending. In July 2018, Marvell acquired the semiconductor manufacturer Cavium to increase Marvell’s exposure to networking. This acquisition should drive further profit improvements and return revenue growth. Given these changes, we believe that Marvell’s new management team embraces Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. (Google) | 8.4% |
| Mastercard, Incorporated | 5.9% |
| Fiserv, Inc. | 5.6% |
| Apple, Inc. | 5.3% |
| Target Corporation | 4.9% |
Small Cap Core
| UFP Technologies, Inc. | 3.0% |
| Atkore International Group | 3.0% |
| Fortinet, Inc. | 2.9% |
| Lumentum Holdings, Inc. | 2.8% |
| OneMain Holdings, Inc. | 2.8% |
Dividend Select
| JPMorgan Chase & Co. | 6.0% |
| Microsoft Corporation | 5.7% |
| Target Corporation | 5.4% |
| Life Storage, Inc. | 4.1% |
| General Mills, Inc. | 4.1% |
Mid Cap
| Amedisys, Inc. | 4.9% |
| Cintas Corporation | 4.5% |
| CDW Corporation | 4.1% |
| Fidelity National Info. | 3.6% |
| NVIDIA Corporation | 3.6% |
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.
