Covington Investment Advisors, Inc. Blog

News, Tips, Commentary, etc.

Acceleration of Ecommerce

When a pivotal economic event takes place like we are experiencing with the coronavirus pandemic there are certain trends that begin to either arise or quickly accelerate. We think the latter is currently happening with Ecommerce. It is no secret that for many years online shopping has been taking market share from brick and mortar retail. But never before have we seen a scenario where many brick and mortar retails were forced to close shop and deemed “non-essential”, while the large online market places became the essential way for consumers to get the goods they needed. Some could argue that Amazon & Walmart, the two largest Ecommerce retailers, became a staple of national security for their distribution capabilities as citizens are quarantined in their homes. Much of this gained business is due to many small retailers simply being forced to close for several months, but we think that Ecommerce retailers...
Continue reading
69 Hits

Federal Reserve Action and Market Volatility

Federal Reserve Action and Market Volatility  In late March the Federal Reserve established the SMCCF (Secondary Market Corporate Credit Facility) to support credit to employers and provide liquidity for financial markets. These new credit facilities gave the Federal Reserve the ability to purchase a larger array of financial products than traditional quantitative easing techniques previously allowed. This included the ability to purchase large amounts of investment grade corporate bonds through SPVs (Special Purpose Vehicles). As shown in the chart above, this action by the central bank had a profound impact on the financial markets. In particular, the creation of these credit facilities caused a peak in volatility in both equity and credit markets. The long-term impacts of the unprecedented monetary actions will remain to be foreseen. But for now, the Federal Reserve has been able to keep financial markets operating relatively calmly while the world navigates the Coronavirus pandemic.  ...
Continue reading
76 Hits

Quality Factors of Our Investment Philosophy

One central part of our investment philosophy that we constantly preach is owning companies that have strong balance sheets. What this means is that they have limited liabilities including debt on their balance sheets as well as low working capital requirements. We also look for those companies that have large amounts of cash on their balance sheets. When these strong balance sheets are paired with good capital allocating management teams future returns tend to be strong in both up and down markets. Goldman Sachs recently created “strong balance sheet” and “week balance sheet” baskets of stocks with the former outperforming the latter.
Continue reading
82 Hits

What's Driving Equity Markets

Continue reading
69 Hits

2020 Earnings Update

2020 Earnings Update  Strict government-imposed restrictions including shelter-at-home policies did not come into place until mid-March across most of the country. This means that the impact to corporate earnings will not be reflected fully in first quarter numbers but more completely in second and third quarter results. First quarter earnings have so far been fairly solid with most companies reporting results in line with initial expectations. As expected, most companies have been cautious with giving too much insight into what upcoming quarters numbers will look like. Roughly half of S&P 500 companies provided 2020 EPS guidance through the end of February. If early reporters are any indication than many of these companies will continue to not give 2020 guidance or withdraw previous projections.    While poor upcoming numbers are largely already being priced in by investors, the second and third quarter will presumably be a bumpier earnings season as the...
Continue reading
87 Hits

Most Recent Blog Posts

Connect With Us

 

Covington Investment Advisors, Inc.
301 E. Main Street
Ligonier, PA 15658
Phone: 724-238-0151
Fax: 724-238-0148
Email: covington@covingtoninvestment.com