Union Pacific and Norfolk Southern!
Now we have to figure out why…
(h/t the WSJ - after the jump)
Smithers, that Omaha boy Buffet is at it again, I see. Well, time to beef up my New Haven, Pennsylvania and Rock Island holdings.
You are a genius, Mr. Burns.
I know…yessss-I know. Now, how are my shares in the Lehigh Valley doing?
Buffett isn’t the only big time investor getting into US rail.
A British fund, the “Children’s Investment Fund” has just taken a half billion share of CSX. Thier message to CSX senior management is “Shape Up or Ship Out”. They aparently see CSX as having great potential - and they’ve put up serious money based on that vision. If the current management doesn’t produce there’s gonna’ be some changes made.
There are other funds buying into US rail. It’s nice to see. These guys don’t invest where there is no growth potential and they will not put up with poor performance.
Railroads are here to stay, it’s a safe investment.
Who else besides me have seen the new TV ads for American RRs? I saw it twice this AM on CNN
I saw one for UP on an ABC station this morning and I swear I saw one for WSOR the other day.
The one I saw is NOT for a specific RR but for American RRing in general
Ha. I beat him to the punch. I bought NS last month.[:D] My broker thought I was making a mistake, now I can’t wait for our next meeting. [C=:-)] I hope he likes crow.[(-D]
Well, well, the geniuses of Wall Street are about to step in it again. This guy from a British Hedge Fund obviously knows very little about the current state of affairs out on the property. Customers large and small are crying out for relief from the significant price increases already put in by Class 1 railroads over the past few years. Their complaints have reached the ears of BOTH Democrats and Republicans in Congress and multiple bills are now pending seeking to impose regulation of one sort or another upon the railroads from rates and routes to a major reauthorization of FRA into the FRSA and doubling the number of FRA inspectors (and probably fines) by 2010.
Into this bleak legislative environment the Wall Streeters would like to demand railroads raise prices aggressively and seek to remove executives and boards that are unwilling to engage in this reckless and dangerous course. Not good news from anyone who earns his living on the rails.
When even Conservative Republican Congressmen are voicing a need for “railroad competition” WATCH OUT!!
I’m unloading half of my RR shares and playing on the house’s money…
LC
I’m wondering what to do myself - I bought BNSF and NSC when they slumped last year, b
Only fascists and communists hate competition.
Well I hold UPRR & I think with gas going skyward that the RRs are in for a huge surge of traffic as gas continues it upward spike I will continue to hold it.
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Well, well, the geniuses of Wall Street are about to step in it again. This guy from a British Hedge Fund obviously knows very little about the current state of affairs out on the property. Customers large and small are crying out for relief from the significant price increases already put in by Class 1 railroads over the past few years. Their complaints have reached the ears of BOTH Democrats and Republicans in Congress and multiple bills are now pending seeking to impose regulation of one dsort or another upon the railroads from rates and routes to a major reauthorization of FRA into the FRSA and doubling the number of FRA inspectors (and probably fines by 2010.
Into this bleak legislative environment the Wall Streeters would like to demand railroads raise prices aggressively and seek to remove executives and boards that are unwilling to engage in this reckless and dangerous course. Not good news from anyone who earns his living on the rails.
When even Conservative Republican Congressmen are voicing a need for "railro
Oh, and lets not forget the recent anti-trust action filed against five Class 1 railroads (BNSF, CSX, KCS, NS and UP) alleging collusion in the fixing of fuel surcharge rates. Ad adverse ruling in this case could inflict serious damage on existing railroad anti-trust exemptions and open pricing to court review.
I’m not dumping my RR stocks, but I am hedging my bets for now. I hear there are ETFs that are set up to short various sectors. I wonder if there is one for railroads yet.
LC
Look at page 78 of the U.S. issue of the May 19, 2007 Economist newspaper (“The new railway barons”) for a good analysis and reason for this unusual interest in railroad stocks. Or at their Web site.
The problem with the current interest of Carl Icahn, hedge funds, etc. in railroad stocks is that they are more interested in lining their own pockets then improving the operations of the business. Warren Buffett is more known as a long-term and somewhat passive investor so I wouldn’t include him with the others I mentioned. If a firm is sitting on a relatively large wad of cash, the new “investors” will often insist that it be paid to the shareholders in the form of larger dividends. Management may have had other ideas for that cash, which may have included capital projects of all sorts, but that becomes irrelevant to the major shareholders, who want that cash in their pockets.
I’m not knowledgeable enough about Icahn’s activities to have any sense of what his investment really means for CSX. But Buffett is generally believed to invest in companies with solid management and significant long-term growth potential. Someone on the other Buffett thread observed that this is an odd moment in the business cycle to be investing in railroads - if you want to buy in, why not wait until a recession drops the price of the stock? Share value has grown for four years - it’s hard to believe that’s a trend that would just continue, unless the growth rates stay high.
I can sort of understand why Buffett might see potential in BNSF, and in Norfolk Southern. What I don’t get is, why UP?
Buffet is based in Omaha. My guess is that he has connections to the company and has probably been invested in UP in smaller amounts for a long time. Note that despite his physical proximity to UP his investment in it is considerably smaller than his BNSF position.
LC
Well, OK, sure - I’ll grant that he can probably get in his Buick, get a cup of coffee at 7-11, and drive himself over to UP headquarters and talk to, oh, pretty much anyone he wants to see. That makes sense. But Buffett’s the world’s richest man, and he got that way by investing his money in companies that did very well. Buffett could, I am sure, buy all of Omaha, cash on the barrelhead, if he wanted to. The thing I don’t get is why would he take his money and put it in UP, when he could put it in something else (something else in Omaha, for that matter) that would appear to the casual observer to provide him with better return on his investment.
I mean, AOL has established itself in my hometown - but I wouldn’t put a dime into it. See what I’m getting at? I’m squeezing my forehead, wondering just what it i
I don’t own any stock in railroads, nor can I really hold my own in a stock argument - but:
If I were WB, I would do exactly the same thing. He invested in what I think is one of the future movers and shakers in the railroad world - BNSF. He then invested in the biggest one, that when they get their act together, will be a top-notch investment. And I sure wouldn’t argue with NS being a very good investment - albeit a little small right now.
I frankly think the man did the right thing in this case, as he usually does…
Mook
Y’know, I don’t know. Michael Sol’s point about timing in relation to the business cycle struck in the now-locked Buffett thread struck me as about right: why buy in after a four year growth run? The conventional wisdom would appear to be that the business cycle is going to cap out and prices will steady, drop, and at some point recover. The canny investor would want to buy close to the beginning of a period of growth, or in the trough that follows a downturn in the economy. But Buffett didn’t do that. Assuming he’s not simply losing it, he’s making this decision on the basis of an inference about the future performance of those companies, which is itself based on some pieces of information. It would be interesting to know what that inference and the data that led to it are - because he made a series of decisions that appear to be highly counterintuitive, or at least counter to what I think he would do.
See, at some level, NSC and BNSF sort of make sense - they fit his MO: both well-managed companies with histories of good performance and preparation for further growth. The only thing that’s odd is, if he’s making his decision on the basis of the information that causes the rest of us to value them, why’s he late to the party? They’ve both been on an upward trajectory for four years now - it s