The stock market continued to do well in the second quarter with major averages moving up approximately 5%. Winslow stocks comfortably outperformed the market as we continued to experience a very good 2014 from an absolute and relative performance standpoint. At the end of our last quarterly letter, we made reference to an acceleration in mergers and acquisition activity, and predicted that the trend would continue. Today, one of our longtime investments Time Warner was the subject of a take over proposition by 21st Century Fox (headed by Rupert Murdoch). Time Warner is up 18% for the day.
Many of our clients have expressed nervousness about the length and breadth of the market recovery from the “great recession” of 2008. This topic has been seeping into media coverage and opinions are quite polarized on the matter.
Our view continues to be that the economy is at the “take off” stage and economic results following the severe weather impact this winter are going to be stronger than expected thereby, accelerating earnings growth. We also would emphasize the abnormally low U.S. Equity exposure in major foundations, endowments, and corporate pension funds. These entities either moved aggressively to diversify in the wake of the 2007-2009 experience or never committed cash and maintained an overly defensive posture.