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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Open Thread: What Are You Buying/Selling/Pondering

2

Comments

  • Oops I meant SKX akaflack.
  • Added to DSL. May add to PDI and buy LUK.

    Scott..I am curious -- why CNI and not CP? I have no strong views on either..just trying to understand both better.
  • edited September 2014
    BWG said:

    Added to DSL. May add to PDI and buy LUK.

    Scott..I am curious -- why CNI and not CP? I have no strong views on either..just trying to understand both better.

    I also own CP, UNP and BNSF (BRK-B). I did own KSU briefly, but don't currently and may go back into it in the future. However, CP, UNP, CNI and BRK-B are all very long-term holdings. I do not have/haven't owned CSX or Norfolk Southern.

  • Too early to start DCA'ing in anything you wanted to drop IMHO.
  • @Scott.

    How do you reconcile its P/E ratio (ttm) 23?
  • edited September 2014
    Charles said:

    @Scott.

    How do you reconcile its P/E ratio (ttm) 23?

    That's not a bad question.

    It's not a 'cheap' stock. I've owned it for a while, so this purchase was not an initiation but a small addition.

    However, I think the railroads are doing exceptionally well and while it's not "cheap", I think with a forward p/e of 18.9 and seemingly every quarter being a "record" recently, especially from the two Canadian rails, I thought the pullback from $75 and change to $70 was worth adding to lightly. S & P still has a price target of $84.

    Still, keep in mind that I have no intention of selling, possibly for many years. I have a long-term view for pretty much everything I own, but there are a few things that I can view owning 10-20+ years from now. The railroads are one example, from a number of standpoints, including the moat (no one's building another railroad in this country and pipelines are going to be increasingly difficult), inflation protection and from the standpoint of I love strategic, vital infrastructure. What replaces railroads in terms of hauling energy, grain and other such goods? Nothing I can see for the foreseeable future.

    In terms of pipelines, it's to the point where I think the Keystone Pipeline very well may not happen. It's amazing to me, but you have discussion that, from the time the Keystone Pipeline was announced until now, the price tag to build the thing has doubled. "WASHINGTON— TransCanada Corp.'s TRP.T -2.23% chief executive said the cost to build the Keystone XL pipeline, currently estimated at $5.4 billion, is expected to double by the time the U.S. government completes its review of the largest part of the project.

    Russ Girling, chief executive of the Calgary, Alberta,-based company, in an interview this week said he expects the project's cost could increase to a "number that gets you into the high single digits to a 10 number." He was hesitant to say the project's cost could double. "I was actually trying to avoid saying those words," Mr. Girling said. "Obviously, the costs have increased significantly." (http://online.wsj.com/articles/keystone-pipeline-cost-expected-to-double-transcanada-ceo-says-1411067631)


    ---
    Between record harvests and continued energy exploration, railroads remain slammed. As I noted in another post recently regarding troubles with getting all of the grain shipped, "In 2009, there were 11,000 rail carloads of crude oil but in 2013 there were 400,000 carloads," (http://www.cnbc.com/id/102021264)

    -----

    Rail is winning over trucking. "CSX CFO Fredrik Eliasson told the UBS Best of Americas conference in London that crowded and underfunded highway systems are boosting demand for rail transportation." (http://seekingalpha.com/news/1979375-csx-says-well-positioned-for-continued-growth-as-long-term-trends-favor-rail) Look at Greenbrier (GBX), American Railcar (ARII) and Trinity (TRN) - all three railcar companies are basically swamped with business and have huge backlogs. Greenbrier: "The rise in the number of deliveries to 4,300 railcars compared to last year's 2,500 brought the increase, as growth observed in the manufacturing unit surpassed the growth level observed in every other segment. " (http://seekingalpha.com/article/2496655-greenbriers-22-percent-upside-is-backed-by-a-strong-backlog-and-industry-growth)

    ----

    Additionally, w/rail:

    "Diesel prices are nearly four times higher today than they were in 1999, forcing shippers to seek the most fuel-efficient modes of travel. According to a 2009 study by the Federal Railroad Administration, rail fuel efficiency varies from 66 to 218 ton-kilometers per liter, whereas truck fuel efficiency ranges from 29 to 57 ton-kilometers per liter.

    Moreover, the fuel efficiency of rail has been ramping up at a far faster rate than trucks. Between 1990 and 2006 rail efficiency improved by about 20 percent, or 1.1 percent annually."

    "The trend toward freight rail is destined to continue, according to a projection by rail transportation veteran Ron Sucik of RSE consulting. He believes that market share of rail could double 2035 as more trains are "double-stacked" with shipping containers and fuel prices continue to rise. The benefit is obvious: One double-stacked train can replace 300 trucks and save 285,000 liters of fuel on the 3,200-kilometer journey between Chicago and Los Angeles." (http://www.scientificamerican.com/article/freight-rail-back-to-the-future/)

    ------

    Basically, is it cheap? No. I don't think the railroads are "cheap" if you're looking at valuations from a historical standpoint, but I also believe there's a railroad renaissance going on in this country and I think it has a ways to go. Again, I also see rails as an exceptional long-term investment for a number of reasons (as noted above.)

    ----------

    Additionally, the other railroad story that I may look at but wish it offered a dividend is Genesee and Wyoming. You have a unique story of a company that has been basically folding one short line railroad after another into its operations over the years. It's the railroad operator no one really talks about much, yet has gone from one tiny short line to 112 railroads organized in 11 regions, with more than 15,000 miles of owned and leased track. Also, it actually does own rail in multiple countries.

    -----------

    Lastly, I think Mexico's ramping up of manufacturing operations will benefit KSU and UNP, with the latter owning 26% of Mexico's large rail operator Ferromex.

    http://seekingalpha.com/article/2477785-mexico-energy-and-autos-offer-growth-spurt-for-kansas-city-southern-part-2

    http://www.bloomberg.com/news/2013-07-03/mexico-auto-boom-means-ford-fusions-ride-rails-to-u-s-.html

    "Burlington Northern Santa Fe, the carrier owned by Warren Buffett’s Berkshire Hathaway Inc., is boosting its Mexican and U.S. auto business, said John Ambler, a spokesman. Union Pacific Corp. (UNP), the largest U.S. railroad and owner of a minority stake in Ferromex, handles about 90 percent of autos crossing the border by rail, said Tom Lange, a spokesman.

    Mexico’s auto exports reached a record 2.36 million vehicles last year, twice the level of 2003, according to the Mexican Auto Industry Association. A wave of automobile plants opening their doors starting at the end of this year probably heralds additional traffic, said Anthony Hatch, an independent rail analyst based in New York."

    Also, minor but interesting related:

    http://seekingalpha.com/article/2498765-how-union-pacific-could-benefit-from-teslas-gigafactory
  • Do you have a view (either of the companies or on the stocks) whether CP or CNI may do better in the long term? Again, just trying to understand and learn more about these two companies. Thanks in advance.

    I also own CP, UNP and BNSF (BRK-B). I did own KSU briefly, but don't currently and may go back into it in the future. However, CP, UNP, CNI and BRK-B are all very long-term holdings. I do not have/haven't owned CSX or Norfolk Southern.



  • edited September 2014
    BWG said:

    Do you have a view (either of the companies or on the stocks) whether CP or CNI may do better in the long term? Again, just trying to understand and learn more about these two companies. Thanks in advance.

    I also own CP, UNP and BNSF (BRK-B). I did own KSU briefly, but don't currently and may go back into it in the future. However, CP, UNP, CNI and BRK-B are all very long-term holdings. I do not have/haven't owned CSX or Norfolk Southern.



    People - myself included - have thought CP was expensive for a while now. However, it has done astonishingly well from a share price perspective and done quite extraordinarily well under CEO Hunter Harrison, the legendary railroad operator that Bill Ackman brought in when he went activist.

    I have no trouble owning both and a couple of others, too. However, if you asked me whether or not CP or CNI, I think CP is seeing considerable benefits from oil by rail.

    "As recently as two years ago, Canadian National didn’t haul any crude. Now it projects moving about 30,000 oil carloads in 2012. Petroleum and chemicals produced 16 percent of the Montreal-based railroad’s C$7.4 billion in revenue in 2012’s first nine months.

    Canadian Pacific predicts reaching an annual rate of 70,000 oil-tank cars by early 2013, after running only about 500 such loads in North Dakota in 2009. Through three quarters this year, the Calgary-based carrier got 22 percent of its C$4.2 billion in sales from the industrial and consumer products category, which includes oil and gas." (http://www.bloomberg.com/news/2012-11-06/cn-rail-cp-rail-surging-with-crude-oil-moving-by-trains.html)

    While the growthier CP has Harrison as CEO (at least for a couple more years, if not longer if he chooses to extend further), I think long-term CNI is the larger, more diversified rail play and is likely to be less volatile than CP.

    CP may continue to show stronger growth, although the shares have moved significantly already (S & P still has a $230 price target.) There has been some discussion that CP, with its recent success and significantly higher stock price, will go after Kansas City Southern or possibly CSX, although I dunno how that doesn't result in some antitrust concerns.

    http://business.financialpost.com/2013/05/14/cn-rail-and-cp-rail-should-consider-buying-kansas-city-southern-analyst/

    http://business.financialpost.com/2014/03/03/cp-rail-should-considering-kansas-city-southern-acquistion-analyst/

    Bill Gates, via his Cascade Investment Fund, is the largest holder of Canadian National.

    I think for someone looking for something more consistent for the long-term CNI is the larger, more diversified rail play and is likely to be less volatile than CP. CP may continue to outperform as Harrison continues to steer the company towards stronger operating performance, but it's already done pretty exceptionally in terms of stock price.

    I do think that either way, I would average into a position in the railroads.

    I believe Ted is also a big fan of the rail stocks.



  • On Monday, we will allocate from 75% fixed income
    ( http://stockmarketmap.wordpress.com/2014/07/ ) into equity: 25% Mid sized growth (QQQ), 12.5% Small Cap value (VBR), and 12.5% Emerging market value.
    The 20 yr. compound growth rate for the model using QQQ / TLT is 5000+ % and is on a steady incline ( chart 7: http://stockmarketmap.wordpress.com/2014/04/ ).

    The 20 yr. cgr for the model using Small cap value is pushing 3000+ % and is on a steady incline ( chart 2 http://stockmarketmap.wordpress.com/2013/12/23/market-map-model-2-using-small-cap-value-weighted-portfolio/ ) .

    And the model using Emerging market value has had steady compound annual returns ( https://docs.google.com/presentation/d/1W356FH5WVwGCEyusN4egcet9ZiJKirMxkXdrIE5tAc0/edit?usp=sharing ).

    We hope the emerging markets will resolve some of their issues and resume their historical performance which has been lagging over the past 8 years.
  • Good stuff Scott.

    You remain amazing.

    Can't thank you enough for your thoughtful contributions to the board.
  • edited September 2014
    OAK up more than 3% today.

    I'm guessing that is because of its stake in DoubleLine, which folks are anticipating will continue to take AUM from PIMCO, now that The Great One has departed.
  • edited September 2014
    Charles said:

    Good stuff Scott.

    You remain amazing.

    Can't thank you enough for your thoughtful contributions to the board.

    Thanks, I really appreciate that.:-) Your contributions to MFO are outstanding and greatly respected, as well.
    Charles said:

    OAK up more than 3% today.

    I'm guessing that is because of its stake in DoubleLine, which folks are anticipating will continue to take AUM from PIMCO, now that The Great One has departed.

    http://blogs.barrons.com/focusonfunds/2014/09/26/seabreeze-buy-oaktree-on-grosss-departure/?mod=yahoobarrons&ru=yahoo
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  • Maurice said:

    It is not unusual for a Barron's article to send a stock soaring or downward the day or two following the release. The question is, what will be the impact in a week or two?

    Well, it becomes the honest question of is your investment time horizon a week or two?

    The Barrons article wasn't even an article as much as a note on the website about the recommendation from Kass. It's nice to see and I agree with the thesis (I do think other companies such as Doubleline will benefit aside from Janus from the Gross/Pimco fallout) but I wouldn't credit a blurb too much for what was a moderate 3% or so move.
  • Old_Skeet said:

    Anybody still with MFLDX?

    Still holding MFLDX.
  • edited September 2014
    As several MFOers are apparently doing, buying a last chunk of GPROX tomorrow.

    New positions recently:

    * PQTIX, the Pimco managed futures fund that's apparently run with more of a tactical allocation strategy than the absolute return strategy of many MF funds;

    * PTIAX, multi-sector bond (barbelled munis + lower-rated non-gov mortgages);

    * MEASX, slowly adding;

    * Starter in VMVFX, Vanguard's new-ish global all-cap "minimum volatility" fund - first noticed it as a solid addition to their funds of funds.

    Also swapped funds around so I could have RNDLX in an IRA (not a new position) - agree with willmatt that it's a great lazy guy's way to invest in CEFs.

    In the selling department, reduced MAINX, eliminated GBOAX.LW, and took some long-term profits in ARTKX, as it hit my loss threshold.

  • "* PQTIX, the Pimco managed futures fund that's apparently run with more of a tactical allocation strategy than the absolute return strategy of many MF funds; "

    I'm rather fascinated by the performance of this fund, although quite concerned with Pimco's goings-on lately. I would like to have seen maybe a little more in the way of specifics on the strategy on the prospectus.
  • Looking at ARTWX and debating whether it's time put rebalance into it or let the apparent slump run longer.
  • Agreed, Scott, about the lack of specifics on how they run PQTIX. I'd been watching the monthly Pimco portfolio disclosures before deciding to take the plunge, and they show what exposures they have in broad categories (equity, currencies, rates, commodities, volatility), but not what their bets actually consist of in those categories. Some of the monthly shifts in exposure have been pretty big - like 25% and more of assets.

    I certainly don't expect them to do this well forever, and wouldn't have any hesitation about pulling out (like with PMHIX) when it stops working.
  • edited September 2014
    Old_Skeet said:
    Never owned MFLDX but track it daily. My sense is that it's a pretty good proxy for a very risk adverse investor. So, I'm thinking its problems may actually be pointing to some "irrationality" in both the equity and bond markets - against which it is probably trying to hedge. In no sense, do I view the fund as a failure.

    Unfortunately, all funds today are at the mercy of the investing public who seem to pile in and pile out. Having to sell into your already declining market positions only heightens a fund's problems. While that issue's not unique to these types of funds, it may be a worse problem for them because few investors truly understand what the fund is trying to do and are willing to stay in it for the long haul. They say "Don't fight the Fed." Another lesson here is, Don't fight the biggest bull in most of our lifetimes.
    ---
    OK - My recent moves? Not much. But I've been averaging into QRAAX and PRNEX under the assumption the commodities rout is overdone. If and when markets recover, I'll average back out as these are speculative positions and not my normal comfort zone.

  • edited September 2014
    BWG said:

    Do you have a view (either of the companies or on the stocks) whether CP or CNI may do better in the long term?

    CP more than doubles buyback from 5M to 12M shares.

    http://www.theglobeandmail.com/report-on-business/canadian-pacific-to-raise-share-buyback-ceiling/article20853232/

  • Put a stop in on Ford about 10 .minutes before it broke through my pain thresbold. Sold quickly. Rarely do I see stock fall that fast in 30 minutes
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  • edited September 2014
    Maurice said:

    scott said...

    Well, it becomes the honest question of is your investment time horizon a week or two?
    I don't understand the question. I never said I was going to invest in OAK. And if I were, I can assure that I am not a trader..
    The idea is that it's a nice positive nod, but I don't really care from the standpoint of it's so ultra short-term.

    You noted: "The question is, what will be the impact in a week or two?"

    I guess it becomes, what's the impact of anything in a week or two? Can't really base decisions on it and as such, it's nice but ultimately not a factor. That's all I'm saying.

    I think we agree - and I agree with you a great deal - but maybe a mis-communication in this case.
  • Initiated position in LUK today -- attractive Price to Book and confidence in management team. Will buy more as it goes lower. Also looking at ZFC as it heads lower; seems more attractive than PDI or DBL on a valuation basis -- will appreciate thoughts of others on this view.
  • I'm cutting back on my international holdings.
  • Bought a small position in HDPSX, it has held up reasonably well this year and have liked the fund for a number of years, finally added it.
  • BWG said:

    Initiated position in LUK today -- attractive Price to Book and confidence in management team. Will buy more as it goes lower. Also looking at ZFC as it heads lower; seems more attractive than PDI or DBL on a valuation basis -- will appreciate thoughts of others on this view.

    LUK (Berkshire, Jr) has been a little shaky since its founders retired (http://dealbook.nytimes.com/2013/06/26/from-leucadia-a-final-letter-to-shareholders/?_php=true&_type=blogs&_r=0), but I think it's certainly very interesting at these levels for the longer term.

    If you like LUK, you may want to browse BAM, MKL and FRFHF.PK.

    ZFC is a stock, while PDI/DBL are funds.


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