With the world wide meltdown in the credit and financial markets, and with the assertion that it has been hitting ‘Hedge Fund’s’ especially hard. How is TCI, that waged the Proxy Battle with CSX fairing? Before the meltdown began in earnest I had heard that their results were at company history low. Just wondering!
TCI is down 25.6% for the year.
I’m wondering if CSX management has any regrets in regards to increasing debt to finance a stock buyback. The whole point of that exercise was to placate some of the “activist” investors who wanted a quick payback in higher stock prices. With the way the credit market and economy is going, the stock might have been worth more now had the stock buyback not taken place…
One thing that was brought up in earlier discussions on this subject was that it wasn’t a good idea for a railroad to be heavily into debt financing as it is easier to cut dividends than interest payments during the lean years. One of the recurrent theme in Hilton and Due’s book on Interurbans is that many were abandoned because they were not able to service their debt - had they been more heavily financed with stock, a few more of them could have lasted until WW2.
An interesting issue that may come back to haunt TCI is that they may be limited in their ability to sell CSX stock because of the presence of their allies on the CSX board, who have access to inside information about CSX.