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Letter to the Editor
This article originally appeared in the April, 2000 Issue of INSIGHT
April 2000 Investment Update
Sherwin-Williams filed their year ending December 31, 1999 10K with the SEC on March 15. It is interesting that for the first time they have broken Automotive out as a market segment and are showing sales, profits, investment, etc. for a three-year period.
In a nutshell, total reported automotive sales including, as we read it, export, international, and OE were approximately $471 million, on which the reported operating profit was $67 million or 13.3 percent, giving it the highest operating margin of Sherwin-Williams’ four major business segments: Consumer, Stores, International, and Automotive.
Overall, when we include NASDAQ stocks, our biggest winner year-to-date is CCC with an over 65 percent gain, and the stock is flirting with its all-time high of a year or so ago. What is driving this stock? Is it the involvement in the Internet parts ordering arena with ADP and Reynolds and Reynolds? Perhaps, but any significant sales and even more elusive earnings are years away, as with any dot com venture.
I believe that CCC with its new management team is finally getting on track, and is slowly but surely gaining more respect with funds and institutions. With Mitchell being sold by Thomson this may well provide a window of opportunity for CCC while Mitchell’s new owners sort things out and set priorities and fund new development.
Speaking of Mitchell, it is still a bit of a mystery to me why Snap-on did not take the collision repair/insurance related products when they purchased the general mechanical related products a while back. Snap-on has added equipment lines to their collision repair related offerings but passed up the electronic interchange and Internet related opportunities that Mitchell offered in collision repair.
Looking at Snap-on’s stock track record over the past couple of years (a drop of almost 50 percent), one might wonder what other opportunities they may have missed.
First Priority Group has not released its earnings report for 1999 as we go to press, unfortunately; thus my comments are confined to their press release and comments reported to be Barry Siegel’s on the Yahoo chat page for First Priority Group. While no major fleets or insurers have signed up since the last issue of INSIGHT, it would appear that Barry himself has been asked to speak at an EDS conference where "many important business people" will be present. Will this spur the EDS/A.T. Kearny investment group to buy into FPGP, or will the "many important business people" present open their checkbooks to buy FPGP stock, and/or will insurers sign up for the new claims handling website? We don’t know. As they say in radio land, "Stay tuned."
The Boyd Group, our industry’s one and only direct tie to the Market, albeit at the Toronto Stock Exchange, continues to make acquisitions in the U.S., the latest being Willows Collision Craft in Washington State, and the price of their stock shares continues to rise modestly.
In addition, Boyd has brought on board Steve Viau, who was most recently with CARA Collision and Glass based in Minneapolis. Prior to that he was with national service operations at Pep Boys and Kmart. Steve, I know from personal contact, understands the potential of industrialization at the shop level.
Our INSIGHT Fund on a year-to-date basis has, as you might note on the above chart, out-performed the Dow Jones Average, the insurer index, and the auto parts index. Well, a loss is still a loss, and until the fund gets into double digits on the plus side, we won’t say much more.
-Charles Baker-
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