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Letter to the Editor

This article originally appeared in the November 2007 Issue of INSIGHT

Tricks and Treats

Boo! Happy Halloween to all! As trick or treat time fast approaches, my look at the goings on at the Stock Exchange this week admittedly has made me shiver a bit. Scary stuff is creeping around in the mortgage loan and housing market these days. Home prices are falling like leaves from trees shivering in a blustery October wind. And yesterday came the evil gloom of still higher gas prices. A couple of tricks, for sure. So where are the treats?

LKQ Corporation, after successfully completing its acquisition of Keystone Automotive, has been treated to a 52 percent jump in the company’s per share stock price, selling at just over $35 per share this month. It will be interesting to see how the combination of aftermarket parts and salvage parts works out during the last two months of 2007. Apparently LKQ shareholders are very confident of success.

On the refinish side, Akzo Nobel has enjoyed a sweet several months on Wall Street. The old-fashioned notion (or so it seems nowadays) that a cash-heavy company offers sound investment prospects to shareholders has propelled Akzo’s per share stock price up to $85, up almost 40 percent YTD.

Refinish paint manufacturers PPG and Sherwin-Williams both reported good quarterly results, as did DuPont. However, the good quarterly reports only seemed to help PPG at the NYSE. PPG’s per share stock price rose to just a hair under $78, up nearly 22 percent from its January mark. The others posted prices virtually the same as they were on January 1.

The four auto dealership companies that trade on Wall Street probably would be jumping for joy this week if their per share stock values were still about the same as their beginning of 2007 postings. The new 2008 vehicle models are truly going to have to be spectacular to help out these national dealership groups. AutoNation is down almost 17 percent YTD; CarMax descended almost 20 percent; Sonic Automotive’s per share price is 19 percent lower YTD; and Penske Automotive Group, at just under $21 per share, is down nearly 12 percent from its January mark. Make that two boos - as in “I need a bandage for my boo-boo.”

INSIGHT’s Insurer Index is still languishing in October, although overall, our insurer stocks have collectively climbed a bit from September’s YTD low mark of minus 11 percent to just over minus 5 percent. Cleveland-based Progressive has had a bumpy quarter indeed, posting a nearly 20 percent decrease in its per share stock price this month.

By the way, insurers have been devoting large chunks of money to advertising lately. It seems that almost half of the commercials on television are asking consumers, in clever and amusing ways, to switch insurance providers!

-Charles Baker-

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