Guest Author Roger Tweed
Still in the Lead-
Our 2014 Portfolio held onto its lead over the S&P 500 during the past four weeks. Since February 21, our portfolio was essentially flat, with solid gains from Fifth Third Bancorp (FITB), Bank of America (BAC), and Hewlett-Packard (HPQ), being offset by large losses in LinnCo, LLC (LNCO), International Paper (IP), and JetBlue Airways (JBLU). During the same period, the S&P 500 gained 1.7%. Since our portfolio’s January 9 inception, it has risen 2.44% while the S&P 500 has gained 1.58%.
Fifth Third led the portfolio with a gain of 9.1%. Regional banks are currently in the sweet spot as they are less affected by international or even national financial issues that can negatively impact money center banks. At the same time, the benefits to domestic banks from higher U.S. interest rates will make regional banks like Fifth Third more profitable. Bank of America was our second-best performer, rising 7.8%. As the tensions over Crimea moderated, the shares of large banks like Bank of America began to recover. Then, the Federal Reserve’s hint of higher interest rates earlier than expected, combined with a successful round of stress tests, gave a further boost to large bank share prices. (more…)