January 31, 2022

Robert G. Hastrom has written quite a few excellent books on business and investing.  His best book may be The Warren Buffett Way (Wiley, 2014), which I summarized here:

The Detective and the Investor (Texere, 2002) is another outstanding book by Hagstrom, which I wrote about here:

The first edition of The Warren Buffett Way was published in 1994.  A few years later, Hagstrom published The Nascar Way: The Business That Drives the Sport (Wiley, 1998).  NASCAR is the National Association of Stock Car Auto Racing.

Following the tenets of The Warren Buffett Way, Hagstrom explains that he first came across NASCAR from a business and investing point of view:

First, I look for companies that are simple and understandable and have a consistent operating history.  Second, for a company to succeed, it must have a management team that is honest and candid and forever works to rationally allocate the capital of the business.  Third, the most valuable companies tend to generate a high return on invested capital and consistently produce cash earnings for their shareholders.  (pages ix-x)

Specifically, Hagstrom had came across the International Speedway Corporation.  Running a racetrack is a simple and understandable business.  Hagstrom also learned that the company generated high returns on invested capital.  And the managers, Bill France, Jr. and Jim France, have done an excellent job managing the business, including capital allocation.

Although the book was written nearly 20 years ago, if you enjoy business and investing, or car racing, it’s a good read.

In the process of learning about International Speedway, Hagstrom had to learn about NASCAR.  Here’s the wiki entry on NASCAR:

NASCAR is second to the National Football League in terms of television views in the United States.  NASCAR’s races are broadcast in over 150 different countries.  As of 2004, the company holds 17 of the top 20 regularly attended single-day sporting events in the world.

Hagstrom says he aims, in the book, to capture some of this excitement of “this superb, uniquely American sport.”

This blog briefly outlines the book based its chapters:

  • Riding with Elmo
  • Rules of the Road
  • It Takes Money to Race
  • Prime Time
  • The Meanest Mile
  • True American Heroes
  • Forty-Two Teams on the Same Field at the Same Time



Hagstrom introduces the sport:

Stock car drivers do things in cars that would make the rest of us faint.  Try to imagine driving 100 miles an hour, then 120, then 160.  Imagine keeping up that pace for three and a half hours; that’s how long it will take to drive 500 miles… Now imagine forty-one other cars around you, all doing the same thing, just inches away from you, scraping against the side of your car and nudging your bumper as they try to pass you.  And you can never slack off.

…To win a stock car race means that you are willing to drive faster than anybody else on the track.  It means that you drive as fast as your nerves will let you go – and then faster.  (page 3)

Hagstrom got the chance to ride with Elmo Langley, NASCAR’s pace car official (in the late 90’s) before the Southern 500 at Darlington Raceway in South Carolina.  Harold Brasington, a retired racer in 1948, spent a year building the track.  He agreed, upon purchasing the property, not to disturb the minnow pond at the west end of the property.  This led Brasington to make that corner of the track tighter and more steeply banked.  The overall result is an egg-shaped track.  Crews have always found it difficult to set up the cars’ handling to be effective at both ends of the track.

At Darlington, notes Hagstrom, drivers must find the right balance of aggressiveness and patience in order to succeed.  If you’re too aggressive, you’ll crash.  If you’re too smooth, you’ll get passed.

Hagstrom also observes that specialized engine builders learned to take the standard 358-cubic-inch V8 motor and make it into a 700-horsepower engine.  Nearly everything else about the car is also carefully engineered for each particular racetrack.  (Today, in 2017, computers receive huge amounts of data from these racing machines.)

The original idea of “stock car” racing was that the cars look—on the outside at least—just like American cars that anybody could buy.  Historically, NASCAR fans have followed with great passion not only specific drivers, but specific car brands, such as Chevrolets, Fords, or Pontiacs.

Darlington Raceway has a special charm:

According to many regulars, there is no more beautiful place to entertain clients and guests than Darlington Raceway.  The hospitality village itself is outlined in white picket fences that surround beautifully appointed white and yellow striped tends.  Flower boxes hang at each entrance.  (page 9)

In addition to the hospitality tents, there are air-conditioned corporate suites high above the track.  A catered dinner is served on linen-covered tables.  As of the late 90’s, there were four corporate suites renting for $100,000 a year to PepsiCo, RJR Nabisco, Unocal, and Anheuser-Busch.

Hagstrom writes that the makeup of race fans has changed over the years.  As of the late 90’s, 30 percent stock car fans have an annual income of over $50,000; 38 percent are female.  Hagstrom says stock car racing at the beginning was for “the rowdiest and roughest,” but today’s stock car races are family events.

Hagstrom continues:

The infield, the open area inside the track itself, has become the last bastion of stock car racing’s most passionate fans.  They travel hundreds of miles in their recreational vehicles, campers, pickup trucks, and vans, and they are equipped to make the infield their home for three days.  They are determined not to miss one minute of racing:  the qualifying runs and the practices on Friday, the support race and then more practicing on Saturday, and the featured race on Sunday, with all its festivities.  (page 11)

In the 1950’s and 1960’s, writes Hagstrom, the infield was quite a bit like the Wild West.  The local sheriff even set up a temporary jail there.  In recent decades, however, track owners have substantially improved their infields in order to charge higher prices.

NASCAR has a number of rules:

NASCAR rules are designed to promote close, competitive racing, which the fans want, in a way that maintains parity and does not unduly favor the well-financed teams.  The paramount force behind all the rules, however, is the safety of both the drivers and the fans.  Everyone in NASCAR is aware of the potential for injury with so many machines running in close quarters at such high speeds, and so the rules and regulations are vigorously enforced.

A NASCAR-sanctioned motorsports event, like the Southern 500, is officiated by NASCAR and conducted in accordance with its rules.  These rules cover not only the race, but all periods leading up to and following it, including registration, inspections, time trials, qualifying races, practices, and postrace inspections.  (page 13)

Corporate sponsorship is the foundation of the sport, says Hagstrom.  There are many different types of businesses—including many Fortune 500 companies—that are NASCAR corporate sponsors.  The highest form of advertising in motorsports is to sponsor a team.  As with other sports, the greatest leverage NASCAR has had in selling itself to advertisers is based increasingly on its television audience.

As far as levels of competition, the highest level in NASCAR today (2017) is the Monster Energy NASCAR Cup Series.  (The highest level used to be the Winston Cup.)

Two neat things about NASCAR racing, historically:

  • pay is based on performance
  • drivers are humble and grateful

Hagstrom explains:

…It is the sound of humility and gratitude and enthusiasm.  It is the sound of athletes who tell you—and who mean it—that they are no bigger than the fans who come out and support them.  It is the sound of autographs being signed, of smiling pictures being snapped, and of kids collecting heroes.  It is what is best about American sports… (page 18)



Hagstrom recounts the history of the sport:

Stock car racing was born in the South, the boisterous legacy of daredevil moonshine drivers who tore up and down the back roads of Appalachia during the 1930s and 1940s.

For years, hardscrabble farmers in the mountains had been making their own whiskey, just as they made their own tools, clothes, and furniture.  But it wasn’t until Prohibition in 1919 that mountaineers discovered that the sippin’ whiskey they made for themselves was worth cash money to the folks in town.  For many mountain families, bootlegging was their only source of income in the winter months.

…By the 1940s, the government began sending federal revenue agents into the Appalachian Mountains to stop illegal whiskey manufacturing.  To avoid the revenuers, the mountaineers hid their stills and began to work only at night—hence the term “moonshiner.”  Drivers would begin their delivery runs after midnight and be safely home before daybreak…

In a stepped-up game of cat and mouse, the revenuers searched for tills by day and staked out the roads at night.  To stay ahead, moonshine drivers constantly tinkered with their cars, trying to eke out a few extra horsepower and to improve the suspension so the car would handle better.  It wasn’t easy barreling over hills and valleys in the middle of the night, dirt kicking up everywhere, and your car loaded down with twenty-five cases of white lightning… (pages 21-22)

Sometime in the mid-1930s “in a cow pasture in the town of Stockbridge, Georgia,” a few moonshiners started arguing about who had the fastest car and who was the better driver.  Someone made a quarter-mile dirt track in a farmer’s field.

After a few races, more and more people started to show up to watch.  The farmer fenced off the area and started charging admission.  The drivers’ pay also increased until it became more profitable to win a race than to run moonshine.  Hagstrom:

After driving over 100 miles an hour on the dirt roads of North Carolina in the middle of the night while being chased by revenuers, the moonshiners looked at these smooth, level, quarter-mile racetracks, crossed their arms, rocked back on their heels, and grinned.

The Flock brothers—Tim, Bob, and Fonty—drove for their uncle, Peachtree Williams, who had one of the biggest stills in Georgia.  Buddy Shuman also ran whiskey and drove stock cars.  But the most famous bootlegger ever to drive stock cars was Junior Johnson.  Junior ran whiskey for his daddy, Glenn Johnson, who had the biggest and most profitable moonshine operation in Wilkes Country, North Carolina.  (page 23)

For instance, Junior had perfected the power slide, which allowed him to speed up into the turns rather than slow down.

But modern stock car racing owes its success to one man:  William Henry Getty France, or “Big Bill” France.  Big Bill France raced in the Maryland suburbs of Washington, D.C., and he worked as a mechanic in garages and service stations.

France and Annie B, his wife, went to Florida to live in Miami.  But after stopping at Daytona Beach, France decided to settle there.  He opened up his own gas station.  Before long, his garage was a favorite hangout of mechanics and race car drivers.

Daytona Beach had hard-packed sandy beaches 500 yards wide and 25 miles long.  It was already known as the Speed Capital of the world.  In 1936 and 1937, writes Hagstrom, the city fathers of Daytona Beach put together races.  (This was partly out of concern for racers who were leaving for the Bonneville Salt Flats of Utah.)  But these races were poorly managed.  So they sought Bill France to manage the race in 1938.

France was already well-liked by most mechanics and race car drivers in the area.  He was also a natural promotor.  And because he had been a racer, he knew what worked and what didn’t in putting on a race.

France convinced a local restauranteur, Charlie Reese, to pay for the race as long as Bill France did all the work.  They would split the profits.  The race was a great success.

Soon thereafter, France heard about an oval dirt track for rent in Charlotte, North Carolina.  France decided to sponsor a 100-mile National Championship race there.  But local reporters hesitated to cover the race because there was no sanctioning body and no official rules.

France couldn’t convince AAA, so he organized his own sanctioning body, the National Championship Stock Car Circuit (NCSCC).  NCSCC would sponsor monthly races at various tracks, and the winners would be determined by a cumulative point system and winners’ fund.  France found someone to run his service station in Daytona Beach—and he got his wife Annie B to handle accounting—so that he could focus completely on setting up the system he envisioned.

1947 was the first full year for the National Championship Stock Car Circuit.  It was a great success.  The points’ fund, at $3,000, was divided among the top finishers.  The bootlegger Fonty Flock won first place.

The problem was that stock car racing at the time didn’t have a good reputation.  France knew it needed a central authority to govern all drivers, all car owners, and all track owners.  So France invited the most influential people from racing to Daytona Beach for a year-end meeting about the future of stock car racing.

France described his vision to his colleagues, including a national point system and winners’ fund.  Hagstrom adds:

…The rules, he declared, would have to be consistent, enforceable, and ironclad.  Cheating would not be allowed.  The regulations would be designed to ensure close competition, for they all knew that close side-by-side racing was what fans cheered for.  Finally, he argued, the organizing body should promote a racing division dedicated solely to standard street stock cars, the same cars that could be bought at automobile dealerships.  Fans would love these races, France argued, because they could identify with the cars.  (page 29)

The group voted to form a national organization of stock car racing.  France was elected president.  And they decided to incorporate the entity.  The National Association for Stock Car Auto Racing (NASCAR) was incorporated on February 15, 1948.

A technical committee set the rules for engine size, safety, and fair competition.  Only American-made cars were allowed.  NASCAR also decided to guarantee purses for the races it sanctioned.  And they established a national point system.

NASCAR today does a very detailed set of inspections.  And the rules are still designed to ensure parity and safety.  As a part of parity, costs are strictly controlled.



Hagstrom writes:

Sponsorship is a form of marketing in which companies attach their name, brand, or logo to an event for the purpose of achieving future profit.  It is not the same as advertising.  Both strategies seek the same end result—corporate profit—but go about it in different ways.  Advertising is a direct and overt message to consumers.  If successful, it stimulates a near-term purchase.  Sponsorship, on the other hand, generates a more subtle message that, if successful, creates a lasting bond between consumers and the company.  (page 49)

Corporate entertainment can be an effective marketing tool.

If the goal of sponsorship is to increase sales, that can be measured over specific time periods.  The same goes for other goals of sponsorship, including increasing worker productivity.

It’s more difficult to measure the impact of stock car racing sponsorship on corporate images over time.  But historically, consumers have been extremely positive towards nearly all companies that sponsor stock car racing.

Hagstrom says it is impossible to attend a NASCAR race without feeling a great deal of emotion.  The cars are so powerful and quick, and the competition is so close and intense, that you cannot avoid being impressed if you’ve never been to a race before.

In one survey (in the late 90’s), stock car racing fans were able to identify more than 200 different companies or brands connected with stock car racing.  Of all the companies mentioned, only 1 percent were incorrectly named by the fans, notes Hagstrom.  This is simply incredible.

Drivers know that their teams couldn’t race without corporate sponsors.  And fans know that ticket prices would be much higher without corporate sponsors.



Hagstrom writes:

The reason NASCAR events do well all season long is the same reason the other sports do so well during the playoffs:  the thrill of seeing the sport’s best athletes compete in a one-time event.  By the time baseball, basketball, and football get to the playoffs, the very best teams are facing each other.  Each game in a playoff series takes on an intensity that increases geometrically;  as the stakes rise, so does the excitement.  So too does the sense of urgency.  Fans know that playoffs and championship games will be played only once, and they had better not miss them.  (page 83)

Although a variety of camera angles and close-up views allow fans to follow NASCAR races on television better than ever before, there is still nothing like seeing a NASCAR race live.




Although Darlington Raceway is credited with being NASCAR’s first superspeedway, world-famous Daytona is the track most responsible for launching the sport of stock car racing into the modern era.  Ask any driver his reaction on seeing Daytona for the first time and you will hear words like “amazing,” “incredible,” and “intimidating.”…  

Without question, Daytona was built for speed.  It’s 2.5 miles long, with big sweeping turns banked at 31 degrees.  Fireball Roberts, another famous 1960s NASCAR driver, was eager.  “This is the track where you can step on the accelerator and let it roll.  You can flatfoot it all the way.”  (pages 107-108)

Hagstrom then describes Talladega (as of the late 90’s):

Talladega stretched the imagination.  At 2.66 miles long, it was the longest and soon the fastest speedway.  It was here that Bill Elliott drove the fastest lap in NASCAR history—212 mph.  Drivers, once they built experience, began racing here at speeds in excess of 200 mph.  Because Talladega is wide (one lane wider than Daytona), racing three abreadst became the norm.  The intensity of competition racheted up several levels.

At last, racers had found a track that was built for speeds faster than most were comfortable driving.  NASCAR had finally answered its own question: Just how fast is fast enough?  (pages 108-109)

Track owners have the following sources of revenue:

  • General admission and luxury suites
  • Television and radio broadcast fees
  • Sponsorship fees and advertising
  • Concession, program, and mechandise sales
  • Hospitality tents and souvenir trailers

Expenses include:

  • Sanctioning fee
  • Prize money
  • Operating costs

Selling tickets has been the key for decades.  As of the late 90’s, grandstand seats, suites, and infield parking account for 70 percent of a track’s revenue, notes Hagstrom.  Other sources of revenue include concessions, souvenirs, signage, and broadcast rights.



From 1973 to 1975, Dale Earnhardt was living hand to mouth and trying to save money to race.  Earnhardt finally got a chance to race at the World 600 at the Charlotte Motor Speedway.  Still, it takes years before a driver can race at NASCAR’s highest level.  Finally, in 1978, Earnhardt came in fourth place at Atlanta International Raceway.  Dale Earnhardt earned Rookie of the Year in 1979.  And he won the championship in 1980.  By the late 90’s, Earnhardt was arguably the greatest stock car racer of all time.

NASCAR race fans are probably the most passionate fans in the world, or at least have been historically.  Without fans buying tickets—and souvenirs and other products—stock car racing as it is would not exist.  But, unlike most other major sports historically, NASCAR fans can walk up to their favorite athletes and talk with them.

Hagstrom writes:

There is much about NASCAR racing that draws people to it.  For one thing, it is easy to identify with the activity.  Almost every adult in America knows how to drive a car, and most can remember the teenage thrill of driving fast.  Many fans own cars that, except for the paint job, look just like cars on the racetrack.  Unlike other sports, you don’t have to be a certain size, weight, or height to be a race driver.  So it’s not too much of a stretch for fans to imagine themselves behind the wheel of those powerful cars.

Something in the human psyche is attracted to danger, and that too is part of the appeal.  Today’s race cars are many times safer than today’s ordinary passenger vehicles;  nonetheless, there is always the sense that something spectacular could happen at any moment.  Finally, racing is inherently exciting in a way that many other sports are not.  The noise, the vibration, the speed all combine to affect observers in a powerful, almost visceral way.

All those factors, however, would not be enough to explain the loyalty of the NASCAR fans were it not for one other critical ingredient:  the intense emotional bond that exists between fans and their drivers.  That bond rests on a foundation of courtesy, humility, and respect that runs both ways.  The drivers’ attitude toward their fans is the unique factor that sets NASCAR apart and makes its drivers genuine heroes.  (pages 152-153)



To win at the highest level, teams need not only a great driver, but a fast car and an excellent crew.  The crew chief is a crucial position.

…In all matters relating to the technical aspects of the car, including building it in the shop and monitoring how it performs at the track, the decisions rest with the crew chief.  The crew chief hires the race shop personnel, including a shop foreman, engine builders, fabricators, machinists, engineers, mechanics, gear/transmission specialists, a parts manager, and a transport driver.  (page 163)

Note again that Hagstrom was writing in the late 90’s.  In 2017, computers are far more powerful and are, accordingly, more essential in car racing generally.

On race day, the race crew is essential.  As of the late 90’s, they could change all four tires and refuel the car in twenty seconds.

In qualifying runs, typically there are more teams than available slots.  Qualifying often depends on tenths of a second.  Fine-tuning the race car requires a high degree of skill and teamwork.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


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