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Letter to the Editor

This article originally appeared in the September 2004 Issue of INSIGHT

Smooth Sailing or Sudden Storms?

The Dow was down below the 10,000 mark this past month but, all things considered, Wall Street had a pretty quiet summer. Mind you, I am knocking on wood as I write this. Anyone who has ever stuck a toe into the stock market waters knows that storms can come out of nowhere in no time at all.

Speaking of storms, I visited some top-notch repair facilities in Florida just days after Hurricane Charley blew through the state. I was impressed by the neighborly pitching-in to help that I saw wherever help was needed.

Insurers in Florida will not be hit as hard as they were after 1992’s Hurricane Andrew. It looks like Florida’s Hurricane Catastrophe Fund will help cushion the blow this time. The fund is expected to cover a big chunk of the catastrophic losses, estimated initially to run over $10 billion.

Sherwin-Williams shares continue again to outperform our other refinish paint manufacturers. The company’s stock price fell a bit in August but is still up over ten percent YTD, at $38.21 per share. Our other refinish paint makers’ stock prices are still not back up to their January postings. I think, though, that all these companies are pursuing a wise course by sticking with plans to cut costs and restructure where it makes sense to do so for an overall more efficient operation.

AutoNation and the United Auto Group stock prices are still getting beaten down this month. Both dealership consolidators are undoubtedly hoping for a great sales month in September and lots of consumer interest in the new models on showroom floors.

Last month I predicted that CCC Information Systems would hopefully end 2004 a little above its initial $16.90 level. Well, when I’m right I’m right! CCC is showing a positive change YTD. The company’s per share price, at $17.39, is up almost three percent over its January price.

The Boyd Group’s per share stock price hit a YTD low point this month, down over 15 percent to $7.96 Cnd.

California-based repair facility consolidator Caliber Colli-sion Centers has agreed to a $5.8 million settlement to resolve a consumer fraud lawsuit filed by California’s Attorney General’s office and to disciplinary actions initiated by the State Department of Consumer Affairs (DCA). Caliber at no time admitted any wrongdoing and issued a statement that it is pleased to put this matter behind the company.

Our INSIGHT Fund Index was up almost 15 percent YTD just one month ago, but dropped in August to a mere three percent over its January standing. Two stars in our index are Keystone Automotive and Progressive Insurance. Keystone is up a huge 262 percent since the company was added to our index a few years ago, right after its per share price plummeted in the wake of the State Farm aftermarket parts case. Progressive is up 205 percent since its addition to the index. Every now and then I do some good forecasting!

-Charles Baker-

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