Brexit Update

After two sharp down days for stocks in the wake of the Brexit vote, U.S. equities rallied sharply on Tuesday as bargain hunters emerged.  The S&P 500, which declined from 2113 last Thursday to 2000 on the close on Monday, advanced $35 to 2035 on Tuesday, recovering about one-third of the June 23-June 27 decline.

While today’s relief rally is welcome, we expect to see considerable stock price volatility in coming weeks as events surrounding Brexit unfold.

We continue to take a flexible and opportunistic approach to the capital markets given high volatility and low visibility.   We mitigate market risk though focusing on 1) owning companies with strong balance sheets that are 2) attractively valued and 3) have strong business franchises that are able to grow shareholder value over time regardless of the economic backdrop.

We will look to use periods of sharp stock price weakness as opportunities to initiate or add to positions in strong companies that are well positioned to grow shareholder value over the next five to ten years.

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