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Letter to the Editor

This article originally appeared in the August 2008 Issue of INSIGHT

Aghast in August

July 15, as you can quickly see from our stock chart here, was a gloomy day on Wall Street for our industry related stocks. Only two of our supplier stocks were up over their New Year postings. Snap On Tools, at $50 per share was just about four percent up, and Solera Holdings out-performed all the others. Solera’s per share stock price was up almost 18 percent YTD.

On the insurer side, SAFECO, at $64.85 per share, was almost 17 percent over its January mark. SAFECO’s shareholders are apparently still pleased with Liberty Mutual’s acquisition of the Seattle-based company.

Our large auto dealership groups were pretty much “car wrecks” in July. All of their stock prices fell rapidly and farther than during any other month in 2008. AutoNation’s per share stock price plunged over $8, losing over 50 percent YTD. CarMax also lost about $8, and ended up nearly 41 percent below its January price per share of $19.88. The Penske Automotive Group, which had been faring a bit better than the other dealer groups, posted a per share price of $11.81 this month, down over 32 percent YTD. Sonic Automotive took the biggest hit at the Stock Exchange of our super dealerships. The price of a Sonic share ended up at $8.39, almost 57 percent below what it was on New Year’s Day.

Reports from both General Motors and Ford about new and immediate cost-cutting at the vehicle manufacturers did not help matters for the dealerships. The sharp drop-off in SUV sales, due to the climbing price of a gallon of gas at the pumps only added to the pain.

INSIGHT’s refinish manufacturer stocks had a bad July, too. Escalating raw materials costs and shipping expenses were big reasons for the dismal showings.

DuPont’s per share price sustained the least damage, down almost seven percent to $41.16 per share. Valspar was almost 15 percent off its beginning of 2008 mark. Akzo-Nobel, previously hovering right around its January standing of just over $76 per share, fell about $12 per share, down almost 16 percent YTD. The Sherwin-Williams Company’s per share price was down over 19 percent this month, and PPG’s per share price dropped over 21 percent YTD to $55.79.

Even the usually steady 3M felt the July heat this month. The company’s per share price fell nearly 20 percent to $67.69.

Both the Dow and the Parts and Equpment Index fell over 17 percent YTD, and our Supplier Index mirrored that. Our INSIGHT Fund Index had its worst posting this year, down over 18 percent YTD.

One bit of good news today is that the price of a barrel of oil has fallen to a little less than a king’s ransom. I think I’ll head out to the yard and find some cool shade.

-Charles Baker-

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