Adams Diversified Equity Fund, Inc. (NYSE:ADX) Q2 2019 Earnings Conference Call - Final Transcript

Jul 24, 2019 • 02:00 pm ET


Adams Diversified Equity Fund, Inc. (NYSE:ADX) Q2 2019 Earnings Conference Call - Final Transcript


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Good afternoon, and welcome to the Adams Diversified Equity Fund's Semiannual Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Lyn Walther, Director of Shareholder Communications. Please go ahead.

Lyn Walther

Good afternoon, and thank you for joining us today as we discuss the results for Adams Diversified Equity Fund for the first six months of 2019. With me today are Mark Stoeckle, the Fund's Chief Executive Officer; Brian Hook, our Chief Financial Officer; and Janis Kerns, our General Counsel.

This conference call contains statements which are considered forward-looking statements within the meaning of the US Securities Act. These statements reflect Fund Management's current views with respect to future events and the Fund's financial performance over the past six months and 12 months and are not guarantees of our future performance. Although forward-looking statements made today are based on what management believes are reasonable assumptions, these statements are subject to risks, uncertainties and other important factors that could cause our actual performance, returns or investment decisions to be materially different from what we project. We assume no obligation to revise, correct or update these statements.

I will now turn the call over to Mark Stoeckle for his remarks.

Mark E. Stoeckle

Thanks, Lyn, and thanks, everyone, for joining us today to talk about the first six months of 2019. I'm going to give some brief remarks, talk a little bit about what moved the Fund in the first six months and then turn it over to Brian to give some details on performance, and then we will take your questions.

After a steep sell-off at the end of 2018, the stock market did reverse course in the first half despite several economic and geopolitical headwinds. While there were signs of slowing in manufacturing, both domestically and globally, the overall US economy remains relatively strong with unemployment at historic lows and inflation under control. If you remember, we began the year with a government shutdown, which ended in late January, making it the longest shutdown on record. We also saw trade negotiations with China break down and the US threatened to raise tariffs on $300 billion of Chinese imports. Tensions also escalated in the Middle East. All of this began to take a toll in May. However, in June, the Federal Reserve reassured the market that it would be accommodative if economic growth were too slow, which calmed markets and had investors wondering how many times the Fed might cut rates before the end of the year.

With this as a backdrop, the S&P 500 increased 18.5%, its strongest first half return since 1997. We are very pleased with our performance, which exceeded our benchmark by 1.4%. Our Fund generated 19.9% return driven by strong stock selection across several sectors. The strength in the market was broad-based with all sectors generating positive returns. The strongest contributors to our performance came from technology, healthcare and consumer staples.

Our technology investments increased 28%. Our holdings in Microsoft