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Letter to the Editor
This article originally appeared in the February, 2000 Issue of INSIGHT
February 2000 Investment Update
What has happened is that for reasons unbeknownst to me First Priority stock continues to increase in value, reaching a high this afternoon (January 20th) of $5.75, not bad for a stock that was trading for under a dollar just a few months ago.
To be truthful, I bought some First Priority Group shares at $0.93, and again at $2.00, and yet again at $3.50. Do I truly believe that First Priority will be successful in having its system used by major insurers to handle claims? No. Are there enough smaller insurers, fleets, and self-insureds to allow First Priority to make a profit handling claims? Yes. If in fact EDS has invested in First Priority this alone may move the stock into double digits. All in all it is a stock to watch. The concept is good and fits with today’s Internet dot com frenzy. First Priority should have an earnings report out very soon. It will make for interesting reading.
At the other end of the growth in stock price are: Safety Kleen, down almost 40 percent so far this year; Copart down almost 20 percent; and Progressive and FinishMaster showing slight declines.
Looking back at 1999 results and the INSIGHT Fund, our two big losers were Keystone, down almost 75 percent and Progressive down nearly 60 percent. Based on projections for the insurance industry for 2000 we will cut our Progressive ownership in half for the INSIGHT Fund and at the same time use those dollars to buy some Sherwin-Williams shares. Their stock is selling at a 52-week low of around $18. Sherwin-Williams appears to be suffering from a couple of problems: first, the digestion of acquisitions on the consumer side, and secondly, from a lack of participation with major home improvement operations. On the automotive refinish side, renewed emphasis appears to be placed on fleet and commercial as well as on consolidators, where Sherwin-Williams has realized some recent successes, i.e.: FIX in Canada and True2Form here in the U.S.
At the same time Sherwin-Williams Co. stock has dropped, PPG and DuPont stocks have shown significant gains, perhaps because of a reduced dependence on the coatings part of their businesses.
Looking into the next four months, I believe that the higher tech stocks, such as ADP and 3M and most likely First Priority Group, will continue to outperform both the insurance and brick and mortar stocks represented on our Investment Page.
-Charles Baker-
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