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Letter to the Editor

This article originally appeared in the November 2009 Issue of INSIGHT

Rosy Outlook?

Fourth quarter 2009 has begun on a pretty positive note - and there are whispers in the air that the economy is slowly starting to recover. Our Collision Industry related stock chart reflects the flickers of positive movement seen on Wall Street in October. Only two of the supplier stocks we track and two of our publicly traded insurer stocks posted per share prices below their depressing January marks. Even better - none of the four stocks were off by more than ten percent YTD.

All told, our Supplier Index was up a hefty 38 percent above its January position, very close to the 32 percent increase for the U.S. Parts and Equipment Index, and just above our very own INSIGHT FUND Index’s 28 percent gain YTD.

I am a bit puzzled by these gains in the midst of a recession marked by steeply rising raw materials and transportation costs, but I must admit that it is nice to see our indices beating the Dow, even though the Dow finally closed the day on October 15 above 10,000 for the first time in eons - or so it seems.

Our Collision Repair related insurers are still struggling on Wall Street, despite a very, very gentle hurricane season this year. Allstate Corporation reported that the company’s net income rose to $221 million from a loss of $923 millionin the year-ago period, caused by the losses from Hurricanes Ike and Gustav in 2008.

Progressive has raised rates for policies sold by around two to three percent this year for policies sold through agents, and about one percent for policies sold directly. Many other large insurers have lowered rates slightly this year. Meanwhile, Progressive reported a one percent increase in profits during the third quarter from the year prior, totaling $3.55 billion. Progressive now is the Number 4 U.S. auto insurer, with a seven percent market share. Progressive’s per share stock price, at $17.16 this month, was the rosiest of the insurer stocks in October, up nearly 14 percent YTD.

Our national car dealerships continue to perform nicely at the Dow. Sonic Automotive is definitely in the pink as far as its stock price goes, up an astounding 216 percent YTD, followed by CarMax, up 160 percent; Penske Automotive Group, 103 percent above its January per share price; and only AutoNation, at just under $20 per share, not quite 100 percent or more above its New Year’s mark.

Happy Thanksgiving to all our readers, your families, and friends! All of us at INSIGHT are grateful for your support.

-Charles Baker-

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