Wall Street in a Selling Mood

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A terrible week for channel stocks and broader market indexes ended with a muted rally as value investors swooped in for bargains.

The Spain terror attacks, coupled with a weaker-than-expected consumer confidence report from the University of Michigan, undermined Wall Street and cut our Ziff Davis Channel Zone Stock Index by 2.97 percent for the week ended March 12. Of our 30 index members, shares in 27 firms dropped. Still, our index held up better last week than the Dow Jones Industrial Average (-3.3 percent), S&P 500 (-3.1 percent) and the Nasdaq (-3.1 percent).

Last week’s slide began amid concerns that stocks are overvalued. The March 11 terror attacks in Spain triggered an even steeper sell-off before bargain hunters entered the market on March 12.

The index’s biggest weekly decliner was the PC Connection Inc. (PCCC, -14.30 percent), although the company didn’t announce any formal news. PC Connection Vice Chairman David Hall, according to multiple SEC filings, has sold more than 30,000 shares in the company since Feb. 3. PC Connection’s stock has declined from $10.44 to about $7.49 during Hall’s selling cycle. But it seems unlikely the price was affected by the sale. Mark Gavin, PC Connection CFO , said the sale is part of a planned sale in a 10B5 program that Hall, one of the company’s co-founders, put in place in August. “The sales are a tiny piece of his overall holdings,” said Gavin, who said Hall still owns around 8.6 million shares.

Last week’s major winner

Last week’s major winnerAmong our index members, American Management Systems Inc. (AMSY, +21.33) was last week’s only major winner. The Fairfax, Va.-based IT consulting firm essentially broke itself into two companies, which were sold to CGI Group Inc. and CACI Corp. Under terms of the agreements, Canada-based CGI will acquire AMS for $858 million in cash and CACI will pay $415 million in cash for AMS’s Defense and Intelligence business. AMS expects the deals to achieve regulatory and shareholder approval in the second quarter.

If approved, the CGI-AMS combo represents a formidable foe to Computer Sciences Corp. (CSC, -1.4%), Keane Inc. (KEA, 0.0%) and other large IT consulting firms. Together, CGI and AMS will have roughly $3 billion in annual revenue and 25,000 employees across the U.S., Canada and Europe.

Meanwhile, Lockheed Martin Corp. and index member Titan Corp. (TTN, -3.49 percent) extended their proposed merger deadline to April 12. Ongoing investigations by the Justice Department and the SEC forced Lockheed and Titan to abandon a Titan shareholder vote on March 16. As reported, Titan consultants may have made certain illegal payments in Europe.

Elsewhere, Tech Data Corp. delivered stellar 4Q results. The distributor posted net income of $38.9 million for its quarter ended Jan. 31, compared to a $303 million net loss for the comparable quarter last year. Tech Data’s year-over-year quarterly sales jumped 23 percent to $4.92 billion. CEO Steven A. Raymund credited strong European sales for the robust results. Still, Tech Data shares (TECD) declined 2.48 percent on the week.

Sometimes, you just can’t outrun market bears.

Stock Index Weekly Performance