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Letter to the Editor

This article originally appeared in the September 2006 Issue of INSIGHT

Making the Grade

This month on Wall Street is a little quieter than last month, which showcased the Dow’s happy little jump of over 400 points in a ten-day period. However, from this investor’s perspective, calm is usually good.

U.S. auto manufacturers are front and center in the Internet buzz of rumors and predictions this week. Talk of various possible partnerships, and perhaps more layoffs and plant closings is in the air of cyberspace. Some postings even hint that one of Detroit’s Big Four is contemplating taking the company private down the road.

Our industry related auto retailers’ stock performances this month are confusing me. On the one hand, AutoNation 's per share stock price, at just under $20, is down over 11 percent from the company’s January mark, impacted by its second-quarter profit drop of 63 percent, announced last month. Car dealers United Auto Group and CarMax, on the other hand, are showing nicely improved per share stock prices. CarMax in particular is up over 26 percent YTD.

In the aftermarket suppliers arena, Keystone Automotive’s per share stock price lost quite a lot of ground during this past month. At just under $35, a Keystone share is about eight percent over its January posting, a far cry from the company’s August mark of 25 percent up YTD.

Progressive’s per share stock price is still lagging after the insurer’s summer stock split. I anticipate some upward movement for this insurer within the next month or so.

The most worrisome company in our stock chart continues to be body shop consolidator The Boyd Group. The company’s stock performance has been going from bad to worse throughout 2006.

As a matter of fact, the experiences of several of the large consolidators this year have been less than stellar. INSIGHT will be studying hard to determine what lessons can be learned and what yet needs to be learned and implemented at the corporate level and within the body shop operations to get a multi-shop operation to the head of the class.

-Charles Baker-

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