I've been thinking with the west coast ports on slow down, the dollar so strong, imports should jump for the next few years. Are any of these port companies public or are they private? The same idea applies to the Panama Canal....maybe the Gulf Coast....also train and trucking companies. How does one best crack this nut -OR- am I too late? What think you? Duke says, "we're late." I say the dollar only gets stronger as the rest of the world sinks.
the Pudd
Comments
"Ports and Related Services: Hutchison Port Holdings (HPH) operates across Europe, the Americas, Asia, the Middle East and Africa. It operates in five of the seven busiest container ports in the world, handling 13% of the world's container traffic. Hutchison Whampoa operates container terminals in Panama, as well as Mexico and other parts of the Americas." (http://en.wikipedia.org/wiki/Hutchison_Whampoa#Industries)
Hutchison Whampoa in Panama (http://www.reuters.com/article/2014/10/11/panama-ports-idUSL2N0S601220141011)
As far as I'm aware, there are no other major port companies (DP World, for example) that are public. Brookfield Infrastructure (BIP) owns some ports, but that company's opportunistic structure means that assets could possibly be sold/bought down the road and their portfolio of assets may change. Do note if you get BIP, it comes with a delightful (not) K-1 at tax time.
Hutchison is not one of my largest holdings, but it's a long-term holding because of their appealing array of holdings (infrastructure holdings, telecom, energy and giant health/beauty retailer AS Watson, which it sold a stake in to Singapore's sov wealth fund, then returned a lot of that to shareholders with a special dividend last year.)
Hutchison has been negatively effected by the conglomerate discount for ages, but hopefully the upcoming restructuring (http://www.bloomberg.com/news/articles/2015-01-09/cheung-kong-to-buy-out-hutchison-whampoa-spin-off-property-arm) changes that. It is a volatile name and not for conservative investors, but does pay out a nice dividend and there has been some discussion that that will increase after the coming restructuring.
As for rails, I own Canadian National (CNI), Canadian Pac (CP), Union Pac (UNI), Burlington Northern Santa Fe (via Berkshire) and Kansas City Southern (KSU). So, I own major rails throughout Canada, much of the US (aside from the East coast rails) and Mexico (Kansas City Southern goes into Mexico and Union Pacific owns a sizable stake in Mexican rail Ferromex and is the only rail to serve all six major gateways.)
Not really into the trucking companies - nothing against them, but I do like the rails more and their hard assets. As I noted the other day, Canadian Pacific (CP) is working with a REIT to unlock value is some of the rail's significant excess land holdings.
To me, these holdings are really not a "too early, too late" as much as they are long-term holdings. I see holding the rails for 10-20+ years. You have companies that have incredible moats and nothing is going to replace railroads unless we are able to teleport grain and other large freight shipments across the country. Plus, the idea of having these as short term holdings and trying to time weak dollar/strong dollar and the like is just not something I'm interested in doing.
As for grain, I also love Archer Daniels Midland (ADM) and its massive global logistics operation, although ADM is certainly other things beyond logistics.
As for Hutchison, I may add slightly to it at some point given the changes coming, but it's not something that I would recommend for anyone remotely conservative and it's never going to be a large position for me. Still, it has a world class collection of assets.
God bless!
the Pudd
Some interactive rail line maps here.
Take care,
Catch
the Pudd
If you have an interest in short lines, Genesee and Wyoming (GWR) is entirely made up of short lines in this country, as well as elsewhere. That, however, doesn't pay a dividend. Still, it's an interesting story in that it's effectively rolling up short lines into its larger whole - it's a giant company and started off decades ago with one very tiny line. "For much of its first century, Genesee & Wyoming was a 14-mile railroad serving a single customer in upstate New York. The company has since grown to be a leading owner and operator of short line and regional freight railroads serving more than 2,000 customers over 15,000 miles of track in five countries."
The railroads are economically sensitive and can be volatile at times (and while they are generally diversified to some degree, some do emphasize certain products/categories and that may lead to outperformance at times and issues at others - Norfolk has had to deal a bit with coal demand, http://www.reuters.com/article/2015/01/26/norfolk-southern-results-idUSL1N0V50NG20150126), but I see rails as very long term holdings and - well, aside from BRK-B - just reinvest dividends. Kansas City Southern and Canadian National just declared nice dividend raises in the last week or so.
There are few businesses that are so vital to the economy where a handful of companies dominate and no one's going to be building new ones anytime soon. There has been some discussion recently about consolidation in the railroad industry (CP was interested in buying CSX or NFS), but that seems to have cooled off considerably as the rails in question seemed against the idea.
Railroads are generally diversified to some degree, but some may emphasize some products more than others - CP has Thanks for reminding me about TAL. It's something that I've been meaning for a while to do more research on and potentially consider adding.
Regards,
Ted
iShares Website:
http://www.ishares.com/us/products/239501/ishares-transportation-average-etf
Nice, Ted. I like that......a little rich yet 23.8 PE. But, on a pullback, it has the two that connect to most Gulf and east coast ports (railroads) and a small fund (22 companies). YeeHAW!!! I like that! Thanks! Going to keep digging. I think this canal thing could be a game-changer due to the west coast crap.
Who hauls all those containers? Do RR's contract that stuff because I'm sure they only go to the nearest depot? OR do they own trucks also? What I mean is: does a trucking company own the rights from 1 or more depots to haul? What think you? Got to stop now.....need a cold one, and the game.....well, ya know.
God bless!
the Pudd