Investment Recap Third Quarter 2016

Stocks continue to advance in the third quarter with gains of approximately 4%. Our results were even better due to a large weighting in small cap stocks, which have led the market this calendar year. Through the middle of October, three of our companies have been absorbed in private equity take outs. This is certainly a good sign and an acknowledgement that, in the search for attractive value, other investors use similar criteria. We track insider purchases and have noticed an uptick in this activity among our portfolio holdings. Certainly, this is another positive note. Finally, this year has seen a further increase in “activist shareholders” initiating positions in stocks within our portfolio.


We are anxious to move past the election cycle and, no matter the outcome, strongly anticipate an upturn in fiscal policy stimulus. Whether it’s obvious agenda items such as repairing bridges, tunnels, and highways or tax code revisions, we are optimistic that reasonable positive change can come about in the next several months.


It appears likely that the Federal Reserve will increase interest rates at their December meeting and the news will not be construed as negative to the U.S. economy or the U.S. stock market. This development has been well advertised and anticipated and is only a small step towards “normalizing” U.S. interest rates, which are at record low levels, and thus do not pose a threat to attracting money out of stocks. Indeed, a rate hike should be seen as an affirmation that the U.S.economy continues to grow and that the Federal Reserve can remove the “training wheels”.