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Letter to the Editor
This article originally appeared in the March, 1999 Issue of INSIGHT
March 1999 Investment Update
The winners to date, interestingly, include a couple of real dogs from last year: Safety-Kleen and Binks Sames. Perhaps they just could not go down any further, or it could be the dead cat bounce.
In any case, these two sell at a fraction of their all-time highs. Continuing in this negative vein, I suggest that you forget the silver lining in the black cloud of despair for First Priority that we talked about last month. The “merger” with American Information (Consumer Car Club) is dead and First Priority Group’s stock has again hit the skids, even with more press releases talking about First Priority’s move into the Internet and a marketing deal with a Florida-based insurance provider.
The same day the upbeat press release was put out by First Priority Group concerning the future, one insider, L. Kupferberg, filed Form 144 with the Securities and Exchange Commission to sell 75,000 shares. The saga of First Priority continues to unfold.
On another unhappy note, CCC’s reported year-end earnings of almost $14 million will most likely evaporate as their accountants review the writing off of expenses related to their investment in InsurQuote.
Their expenses are related to startup costs of InsurQuote and were not unexpected. While CCC only holds less than 20 percent of stock of InsurQuote, CCC’s auditors have held that the costs should be charged against CCC’s current (1998) earnings, using the equity method of accounting as recommended by the company’s outside auditors.
The charge to earnings will be between $3.5 and $14.5 million, with the expectation on our part that it will be far closer to $14.5 than to $3.5 million.
This reported loss may well impact the price of CCC’s stock when the final results are known. This impact should, in our opinion, be short-lived and should not affect the long-term value of their stock, and may, in reality, prevent a buying opportunity if the stock drops to $10 or less from its 52-week high of $28.
-Charles Baker-
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