Tom Farrey
 Sunday, November 7
The stock in stock cars
By Tom Farrey

 On December 11 at 12:03 p.m., with the roar of the NASCAR season having faded, Delaware Jack fired up his own engine on an Internet message board.

"How can this sport shut down for three months?" he implored. "Why does the Busch Series run congruently with the Winston Cup series? It could be running now. In fact, why isn't this series elevated to the stature of Winston Cup and be the basis of a new league with a draft held to see who drives where?"

On Dec. 14 at 11:03 a.m., Kenny Reeves replied.

 Jeff Gordon
 Is Jeff Gordon happy about winning the Daytona 500, or impressed with the latest stock run-up?

"Race in the winter?" Reeves wrote. "The November through February time frame is perfect for the drivers to get out and meet the fans and get interest going through the winter and then start with a bang going into Daytona."

Delaware Jack, Dec. 14, 2:24 p.m.: "Change is coming whether invited or not. NASCAR can oversee and control it or be a victim of it. ISCA should be in the forefront of this." He closed this spirited exchange by pointing out the common ground both sides share: "62 days to go."

The Daytona 500.

Can you hear the whooping on Wall Street?

For most race fans, the recent Daytona 500 represented the start of the stock-car racing season. It meant loud cars, checkered flags and Jeff Gordon pulling into victory lane. It was a long day consuming food and beer and decibels, and weather permitting, the first chance to feel the sun on their backs.

For other, more enterprising race fans such as Kenny Reeves and Delaware Jack, the utterance "Gentlemen, start your engines" may as well have meant "Investors, check your portfolios." They no doubt will be monitoring television ratings, counting up the new sponsors and celebrating the success of NASCAR in prying more dollars from fans' pockets each year.

Oct. '98
  International Speedway
  Speedway Motorsports
  Penske Motorsports
  Action Performance

For the most part, these fan/investors have been rewarded for putting their money where their hearts are. Auto-racing stocks grew a whopping 31.3 percent in value in 1998, according to Wheat First Union, a brokerage house in Richmond. That means they did even better than the benchmark, Standard & Poor's 500-stock index, which increased by 26.7 percent last year.

Those who bought the two most prominent NASCAR-related stocks when the overall market was down are even more delirious. International Speedway (ISCA), the company that owns the Daytona track, has seen its stock jump 56 percent since October. Speedway Motorsports, which owns many of the other tracks where Winston Cup races are held, has seen its stock nearly double in price during that time.

In other words, with a $1,000 investment four months ago in either of those companies, you could have made enough money to pay for an entire Daytona weekend and probably still have some profit left over.

"Fans who moan and groan about high ticket prices should turn that equation around and make it work for them," said Scott Swanson, an analyst at Pasadena, Calif.-based Roger Engemann & Associates, a money management firm that invests in motor sports stocks. "You figure, if these guys are making so much money off me, why not own the company?"

  For a behind-the-scenes look at the Daytona 500 in the days leading up to the race on on race day itself, watch Outside the Lines on ESPN on Wednesday at 9 p.m. PT (midnight ET).

If you miss hour-long documentary that features exclusive video footage and interviews, the show airs again on Saturday at 4:30 p.m. ET.

At first blush, Wall Street might seem like an odd avenue on which to find NASCAR fans. A dirt road in Hazzard County would seem more like it, considering the lingering redneck image. Yet, investment pros say that it's especially important today to buy only companies you know a lot about. After all, most companies' stock lost value last year, despite an overall rise in the Dow to record levels.

Well, NASCAR fans not only are more loyal to their sport than other fans, they know the nitty-gritty on events, cars and drivers. Personally, the idea of watching moving billboards for hours on end keeps me from becoming a bigger fan -- but there's no denying that those who do follow the sport closely have an unparalleled awareness of its sponsors.

They're grateful, too, with 72 percent of NASCAR fans saying their would buy a product of a NASCAR sponsor over a competing brand, according to one survey. That compares with 38 percent of NBA fans.

Hoping to tap into that loyalty, two North Carolina-based companies have opened mutual funds in the past year that look to invest in auto racing companies. A ridiculously narrow niche? You bet, so the StockCar Stocks Index Fund and the Motorsports Associated Growth & Income Fund are allowed to invest in larger companies, like McDonald's, that merely advertise or are related in some limited way to the sport.

Still, Morningstar analyst Russ Kinnel wrote in January of the Motorsports Associated Growth & Income Fund, "My instinct is to find this one a shelf in the Fund Marketing Hall of Shame and polish it regularly until it liquidates."

So far, investors agree: After seven months, the fund has less than $200,000 in assets, according to portfolio manager Kevin Melich. It probably hasn't helped that the fund is connected to a company that changed its name -- from Westview Capital Investments to Pegasus Capital Investments -- after getting in trouble with the Securities and Exchange Commission for defrauding investors in an unrelated matter. The motorsports fund is owned by Pegasus Sports Marketing.

Jack Plymale, president of Pegasus, did not return phone calls.

With auto racing stocks and funds, it's a case of buyer beware. An irrational attachment to a sport, company or concept, of course, can lead to a bad hangover. But that's true of any investment on the market, and so far it's been hard to argue against these stocks. Even Penske Motorsports, which is primarily involved in the less popular open-wheel racing, has handsomely rewarded investors who bought on the October dip.

Analysts familiar with the largest of these stocks continue to recommend buying them, despite their run-up in recent months. They're especially buoyed by the fact that auto racing is the second most-watched sport in the country now on television, behind the NFL.

"The prospects going forward are favorable because the popularity of the sport is growing, the TV rights will continue to rise, attendance is up, and NASCAR is getting into some larger markets," Swanson said of new tracks being built in Kansas City, Denver and Chicago. "The sport is being put before millions of new eyes."

The Dukes of Hazzard have exacted their revenge, and they're living it up.

Senior Writer Tom Farrey ( contributes a weekly column that usually appears on Wednesday.