Paragon Capital Management's Q3 2022 Vs. Q4 2022: Assessing Investment Strategy Changes

Paragon Capital Management LLC is a registered investment advisor that manages nearly $2.5 billion in assets. The third quarter of 2022 marked the end of a challenging period for many investors, and the firm made strategic moves in the subsequent quarter to ensure that their portfolio was best positioned to capture gains from the recovery of the economy. In this article, we'll review Paragon Capital Management's Q3 2022 and Q4 2022 13F holdings comparison. We'll unpack the purchases and sales made in Q4 2022, and evaluate how these changes might impact the financial growth of the firm. Purchases ConocoPhillips (COP), Devon Energy Corp (DVN), and Raytheon Technologies Corp (RTX), among others, were among the top purchases made by Paragon in Q4 2022. The energy sector has seen a recent uptick, and ConocoPhillips and Devon Energy Corp appeared to be undervalued stocks in this space. Both stocks had been trading lower than their historical price-to-earnings ratio, which made them a smart purchase for Paragon, confident in a strong recovery in the energy sector in the years ahead. Similarly, Paragon acquired shares of Raytheon Technologies Corp, a company focused on aerospace and aviation. The purchase came amid several significant defense contracts being awarded, a deal Paragon is confident will offer strong returns in the long-term. Sales While there were only a few notable stocks sold off in the Q4 2022 portfolio review, those stocks accounted for some significant changes. For example, Paragon Capital Management sold its entire position in Intel (INTC) in Q4 2022, a move that may come as a surprise given Intel's historical stability. However, with the market showing a shift towards cyclicals and growth tech stocks, the firm saw potential vulnerabilities ahead for Intel’s stock. The firm also opted to sell off part of its holdings in Amazon, despite shares already being down. Amazon had failed to grow as Paragon had hoped, causing them to reassess the investment's worth. Pfizer (PFE) was another significant sale for Paragon, having sold its entire position ahead of some recent fluctuations in the healthcare sector. While the global pandemic has certainly affected the healthcare sector, Big Pharma appears to be stagnating. Pfizer's low dividend yield and negative returns in recent months made it a weak player in the health sector, leading to its eventual sale. Neutral changes In between the firm's top purchases and sales was an extensive collection of stocks that Paragon opted to hold onto without making any significant changes. Apple Inc (AAPL), for example, was one of the stocks that Paragon held steady in its portfolio. Although Apple shares experienced a slight dip, the stock remains a sturdy performer and key player in the stock market. The technology sector, of which Apple is a representative, has seen some bumps in the road amid a labor shortage and supply chain disruptions. Still, solid fundamentals and an excellent reputation among consumers and investors make Apple a reliable and necessary investment for Paragon Capital Management. Similarly, Johnson and Johnson (JNJ) and Microsft Corp (MSFT), among others, had been retained in the portfolio, not seeing any major changes during the portfolio's review quarter. The Bottom Line Paragon Capital Management LLC's Q3 2022 Vs. Q4 2022 13F Holdings Comparison saw the firm effectively rearranging its portfolio to accommodate the shifting market landscape. While selling off Intel and a partial sale of Amazon may have come as a surprise to investors, the firm's choice to invest in ConocoPhillips, Devon Energy Corp, and Raytheon Technologies Corp show a calculated confidence in a strong recovery in the energy and transport sectors. With energy and infrastructure being a key focus of the Biden administration, these stocks may be wise investments for Paragon Capital Management. As investors adapt to the new normal, keeping a watchful eye on energy and cyclical tech stocks may prove wise moves.