Gold Leaf Market Newsletter
Each quarter we publish our results in a newsletter where we explain our activities for the quarter and share our observations of the overall market. To subscribe to this free, quarterly newsletter, send us an email at: firstname.lastname@example.org
MORE OF THE SAME
October 11, 2017 by
Paul F. Rodgers, CFA
The market continued its winning ways posting a +4.5% gain for the 3Q and propelling the S&P 500 to a +14.2% return year-to-date. In the 3Q, the tech sector was up +8.3% with semiconductor stocks leading the charge. Energy rebounded from earlier lows and moved up +6.0%. Financials see-sawed throughout the Q but ended by gaining +4.8% on the hopes for further (profitable) rate hikes. To the market’s credit, companies are reporting solid earnings. Yet all of this good news is still piggy backing on the very accommodative central banks (now European and the Bank of Japan). As detailed below, we have trimmed fully valued equities.
Our semiconductor stock, Microchip Technology, was up +16.3% for the Q on heightened demand. Gilead, which was sitting on $36.6 billion in cash, purchased Kite Pharma, a leader in CAR-T therapies for cancer. The market liked the news and Gilead finished up +14.5%. Our energy stocks bounced higher: ConocoPhillips and Phillips 66 were both up over +10.0%.
Widely held Cedar Fair was down -11.1% for the Q. The company announced they had a very good year; they just wouldn’t break records as the Street had forecasted. Energy Transfer Partners LP lost -10.3%; the company was fined for several EPA violations as it was building out its pipeline system. We judge those to have been minor bumps in the road and in no way a fundamental impairment of the company.
During the Q, in income seeking accounts, we added a new security, Nuveen’s Preferred & Income Opportunities Fund. The fund, comprised of higher quality preferred stocks, was yielding 7.4% at purchase. We backfilled on some of the equities that had retreated in price. We added to our positions in BioSpecifics (therapeutic collagen pharma), DoubleLine Credit Fund, Energy Transfer Partners LP, and Hospitality Properties (hotel REIT).
Across the board, we trimmed our Eaton, Microchip Technology, Portola Pharma (after a torrid run), and Service Corp. International. All the stocks were nearing full valuation and the proceeds helped in the purchase of the aforementioned.
Gold Leaf is an independent Registered Investment Advisor that buys stocks/bonds in cash positive companies with sustainable competitive advantages. As an independent firm, Gold Leaf provides objective investment management. Our goal is to protect client assets on the downside while participating in most of the market’s upside.
October 1, 2017 Paul F. Rodgers, CFA
Gold Leaf does not provide legal, accounting, or tax advice. Please consult your personal lawyer or accountant.