Weekly Investor – March 22, 2021
S&P Falls Modestly for the Week
The S&P 500® Index fell modestly last week. Investors balanced continued data of an improving economy against the possibility of higher interest rates. During the week, the Federal Reserve reiterated its easy money policies. Both the Information Technology sector and the Financials sector were lower for the week. Higher interest rates tend to hurt secular growth areas of the market, particularly tech stocks. Bank stocks were weaker after the Fed’s decision not to extend the Statutory Liquidity Ratio (SLR) on treasury bonds and bank reserves. In economic news, retail sales for February fell more than expected partially due to poor weather.
In stock news, FedEx Corporation reported results well above expectations, as profits doubled versus last year on improved margins in its ground business. The package carrier is benefiting from a surge in e-commerce coupled with fewer commercial flights that typically stow packages. Lennar Corporation shares gained after a strong earnings beat and a new joint venture with institutional investors to build affordable homes.
The S&P 500 Index was down 0.8% for the week. Its top-performing sectors were Communication Services (0.5%) and Health Care (0.4%), while the bottom-performing sectors were Financials (-1.7%) and Energy (-7.7%). In the fixed-income market, the 10-year Treasury yield was up, ending at 1.7%.
We continue to seek companies that reflect our Change-BasedSM investment approach.
Change Based Investment
Crown Castle International Corp. operates as a real estate investment trust. Crown Castle owns, operates and leases cell towers and other infrastructure for wireless communications. The company was founded in 1994 and is headquartered in Houston.
Recently, Crown Castle took a different strategy than its main competitors. In addition to owning cell towers, Crown Castle began investing in small cell and fiber networks–a new way of expanding its wireless coverage. This change is important as wireless carriers roll out new 5G infrastructure (the next generation of wireless connectivity). Elliot Management, an activist shareholder, has been pushing Crown Castle to focus more on shareholder returns. With the build-out of the 5G market, increasing demand for small cell networks and an activist shareholder, we believe the company has a long runway for sustainable sales.
Top 5 Equity Holdings
Large Cap Growth
|D.R. Horton, Inc.||4.7%|
Small Cap Core
|Medpace Holdings, Inc.||4.2%|
|OneMain Holdings, Inc.||4.1%|
|America’s Car-Mart, Inc.||3.1%|
|UFP Industries, Inc.||2.9%|
|JPMorgan Chase & Co.||6.0%|
|Truist Financial Corp.||4.1%|
|Eaton Corporation Plc||4.0%|
|Zebra Technologies Corp.||4.2%|
|Marvell Technology Group||3.5%|
|Builders FirstSource, 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.