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Letter to the Editor

This article originally appeared in the December 2004 Issue of INSIGHT

As Time Goes By

This year certainly flew by. It seemed, when I glanced over my comments from my January Investment Update, that I just wrote them a few weeks ago. I guess time goes by quickly when Wall Street operates at a fairly calm pace.

The year really was pretty quiet for Collision Repair Industry related stocks despite the hotly contested presidential election. I am pleased to read that, as far as the Stock Market goes, I predicted, in January, that “the economy should chug along rather nicely” during 2004.

Keystone Automotive Industries started out this past January with a per share stock price up almost 60 percent over its dismal January 2003 value, a remarkable recovery after the State Farm aftermarket parts court ruling hit the distributor’s bottom line. The upward climb ended in October. The last quarter of 2004 has been a bit of a struggle for Keystone. Today the price per share is down a bit over 16 percent YTD, and the company’s removal of some of its headlamps from stock shelves will certainly not help Keystone to climb back up to its per share $25.60 January level.

I am still optimistic about Keystone’s overall company profitability and growth. I believe we will see some healthy improvement in its stock in 2005.

The refinish manufacturers have diligently worked to cut costs, improve operating efficiencies, and still struggle to increase marketshare in a stagnant market. Sherwin-Williams, with a per share price up over 30 percent YTD, and BASF, up almost 15 percent YTD, stand out. Quarterly reports from all the major refinish manufacturers were quite good.

Insurance Auto Auctions had the unhappy distinction of being mentioned in my January article for its wretched 22 percent drop in its per share stock price in 2003. The auction site operator really turned things around during 2004. The company’s price per share of stock is up a very substantial 66 percent YTD. What a difference a year makes!

Copart, our other auction site operator, had a good 2004, too. Its current per share price of $22.95 is up almost 40 percent YTD.

Insurers got hit hard in the aftermath of the four hurricanes that hit the South this year, but the Stock Market was smooth sailing all year for our insurer stocks.

The Boyd Group, the North American shop consolidator, has not been faring too well in the Stock Market. With its stock per share price down almost 30 percent YTD, the company may decide to take the next year off from its acquisition track and work on improving performance at its currently owned facilities.

Both of our national auto dealerships, AutoNation and the United Auto Group, are hoping for a better year in 2005.

I wish you and yours a New Year Filled with happiness and prosperity!

-Charles Baker-

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