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Letter to the Editor

This article originally appeared in the September 2008 Issue of INSIGHT

Big Winds

Well, hurricane season has officially arrived, with two big storms bumping up and down the Florida coast and westward into the Gulf. After a decidedly lackluster showing by our insurer stocks this Summer, it will be interesting to see if there will be many disaster insurance claims to handle, and how insurer per share stock prices will fare.

SAFECO, at $67.67 per share, was our only insurer stock posting a nice increase in price over the recently acquired company’s January mark. Allstate’s stock price dropped nearly 12 percent, about six dollars lower than at the beginning of 2008. Progressive’s stock price is off almost three percent YTD.

The stormy weather at the Stock Exchange shows no sign yet of letting up. Our large auto dealership groups were pretty much “off the road” in August, but were not as much in the red on Wall Street as they were during July. All of their stock prices improved over their lowest point YTD in July. Sonic Automotive’s stock price staggered up a bit to $11.39 per share. CarMax ended up nearly 24 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, moved up to about 14 percent behind its January posting per share. AutoNation’s per share price recovered somewhat from the company’s disastrous July price of $7.57, a not quite as gloomy 21 percent away from its New Year mark.

INSIGHT’s refinish manufacturer stocks are experiencing the Dog Days of Summer on Wall Street, too. Escalating raw materials costs and shipping expenses continue to be the big reasons for the dismal showings.

DuPont and Sherwin-Wil-liams both posted per share prices up about three and a half percent YTD. Valspar’s stock price was up about nine percent YTD, and PPG’s ended up down about nine percent YTD. Akzo Nobel’s per share price dropped a bit farther in August. At just over $59 per share, The Dutch company’s share price was down about 22 percent from January.

The best performers at the Dow among our industry related stocks were Solera Holdings, parent of Audatex, with a per share price 20 percent over its January mark, and Snap On Tools. At $59.30 per share, Snap On has advanced over 23 percent YTD.

The Dow, down a hair over 12 percent YTD, was out-performed by both our supplier and insurer charts this month. Our INSIGHT Fund Index recovered somewhat from its worst posting this year in July, when it was down over 18 percent YTD.

Speaking of windy weather, I think Americans are all hoping that the windy speechifying that will be going on at the Democratic and Republican National Conventions will blow some good economic news our way.

-Charles Baker-

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