which struggled last quarter on litigation related
Posted: Thu Jul 10, 2025 6:31 am
Bank of America, business, recovered nicely during the first quarter. Consumer staples were lagging performers in the quarterly rally, as investors turned away
from more defensive issues. Diversified food products providers, such as Genera Mill sand Tyson Foods, hurt relative return during the period. In addition to the swing to higher
risk assets, additional drags on these stocks included declining quarterly sales volumes at
General Mills and weakness in beef sales (due to rising costs) at Tyson. We believe the
outlook for both stocks remains positive despite the short-term setbacks. We continue to like the consumer staples sector, as steady businesses and high dividends continue to actas a hedge against overall market volatility.
While energy stocks were among the bottom shop performers in the benchmark during the
period, they were a positive contributor to the portfolio. The sector usually trades in line
with the price of oil, but the surging price (above $100/barrel at quarter end) actually acted
to discourage investment in energy in the first quarter, as investors worried that higher
prices would ultimately sink demand. We don’t see any sustained drop-off in demand for
oil in the future. The new car market in China is on track to exceed 20 million vehicles in
2012, and demand from China (which has little oil production of its own) and other
emerging markets is likely to keep the price of energy high. Within the portfolio, it was our
refinery holdings that outperformed, as these companies benefited from a wider “crack”
spread. Marathon Petroleum and Valero Energy were the most notable contributors.
Outlook
It seems unlikely that companies will be able to sustain the level of earnings that we have
seen over the past 18 months. That said, we believe that future stock gains may be fueled
by expanding price/earnings, particularly in the low interest rate/low inflation environment.
It appears that many investors missed out on the swift first quarter rally, holding money on
the sidelines. If this is t
from more defensive issues. Diversified food products providers, such as Genera Mill sand Tyson Foods, hurt relative return during the period. In addition to the swing to higher
risk assets, additional drags on these stocks included declining quarterly sales volumes at
General Mills and weakness in beef sales (due to rising costs) at Tyson. We believe the
outlook for both stocks remains positive despite the short-term setbacks. We continue to like the consumer staples sector, as steady businesses and high dividends continue to actas a hedge against overall market volatility.
While energy stocks were among the bottom shop performers in the benchmark during the
period, they were a positive contributor to the portfolio. The sector usually trades in line
with the price of oil, but the surging price (above $100/barrel at quarter end) actually acted
to discourage investment in energy in the first quarter, as investors worried that higher
prices would ultimately sink demand. We don’t see any sustained drop-off in demand for
oil in the future. The new car market in China is on track to exceed 20 million vehicles in
2012, and demand from China (which has little oil production of its own) and other
emerging markets is likely to keep the price of energy high. Within the portfolio, it was our
refinery holdings that outperformed, as these companies benefited from a wider “crack”
spread. Marathon Petroleum and Valero Energy were the most notable contributors.
Outlook
It seems unlikely that companies will be able to sustain the level of earnings that we have
seen over the past 18 months. That said, we believe that future stock gains may be fueled
by expanding price/earnings, particularly in the low interest rate/low inflation environment.
It appears that many investors missed out on the swift first quarter rally, holding money on
the sidelines. If this is t