Weekly Investor – May 17, 2021
Consumer Prices Rise
Markets fell last week as investors feared inflation could prompt the Federal Reserve to end its easy-money policies. Fueling that concern was data on consumer prices that rose 4.2% year-over-year, well above consensus estimates. Major contributors to the rise in prices were used cars, rental cars, airfare, lodging and food away from home.
Fears of higher inflation and higher interest rates led to a selloff in many growth stocks. Shares of Tesla, Inc., The Trade Desk, Inc. and Square Inc. all fell by over 10% for the week. With an economic resurgence underway and higher rates potentially on the horizon, investors sold Covid-winners for economically sensitive sectors. This week, investors will scrutinize the Federal Reserve minutes for clues on potential policy changes as economic growth accelerates and prices paid increase. With over 90% of firms reporting, results have surprised to the upside by over 20% for the first quarter.
The S&P 500® Index was down 1.4% for the week. Its top-performing sectors were Consumer Staples (0.4%) and Financials (0.3%), while the bottom-performing sectors were Technology (-2.2%) and Consumer Discretionary (-3.7%). In the fixed-income market, the 10-year Treasury yield was even, ending at 1.6%.
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.
In 2016 an activist investor installed Matt Murphy as Marvell’s CEO. Murphy 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 focusing on research and development spending. In 2018, Marvell acquired Cavium. In 2019, Marvell acquired Aquantia and Avera. In 2020, Marvell acquired Inphi. These acquisitions broadened Marvell’s end markets and increased the company’s growth rate. Given these changes, we believe Marvell fits Argent’s Change-BasedSM investment approach.
Top 5 Equity Holdings
Large Cap Growth
|D.R. Horton, Inc.||5.1%|
Small Cap Core
|Medpace Holdings, Inc.||4.1%|
|OneMain Holdings, Inc.||4.1%|
|UFP Industries, Inc.||3.4%|
|America’s Car-Mart Inc.||3.0%|
|JPMorgan Chase & Co.||5.8%|
|United Parcel Service, Inc.||4.2%|
|Eaton Corporation Plc||4.1%|
|Zebra Technologies Corp.||4.2%|
|Builders FirstSource, Inc.||3.4%|
|United Rentals, Inc.||3.1%|
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.