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Kansas City Southern Message Board

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  • beagle_badge beagle_badge Sep 19, 2009 1:13 AM Flag

    KSU stock price

    You are asking the right questions. But, the answers are subjective.

    Part of the answer is that prior to the recession a subsidiary of Lehman Brothers (Neuberger Berman) was actively accumulating shares in KCS. They became the largest shareholder owning approx 14% of the company.

    One year ago last week Lehman Bros. was liquidated.

    Similarly, there were two other hedge funds that were enhancing their holdings of KCS, probably with the view of orchestrating KCS as a takeover target. (Same thing was happening over at CSX with the TCI et al. hedge funds.)

    The hedgies got caught and were forced to liquidate their positions. The larger railroads share prices were not "punished" as much because:

    1. their ownership was less influenced by hedgies
    2. they pay dividends
    3. KCS is only starting to reap the benefits of a larger transportation franchise.
    4. KCS bonds are not investment grade and so, with the deleveraging that took place, KCS was perceived to be potentially vulnerable.
    5. the insecurity resultant from the backlash from the "buy American" source clause in the US stimulus package made KCS vulnerable because of their Mexican franchise.
    6. a Democrat was elected President whereas the Governor and state of Texas is Republican--thereby likely stalling the development of the TransTexas Corridor and associated infrastructure funding.

    Everybody will have opinions--all of which, like mine, are just "tea leaf reading", but, likely contributed.

    beagle

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    • Thanks for your response. I understand how hedgies can affect stock prices, having been personally affected when they dumped some MLPs I own; Lehman was a major investor/dealer in many MLPs. Just the same, Neuberger Berman survived the Lehman bankruptcy pretty much intact. Could it be they--or other hedgies--have started accumulating KSU shares again? Someone is driving up the price.

    • Thanks for your response. I understand how hedgies can affect stock prices, having been personally affected when they dumped some MLPs I own; Lehman was a major investor/dealer in many MLPs. Just the same, Neuberger Berman survived the Lehman bankruptcy pretty much intact. Could it be they--or other hedgies--have started accumulating KSU shares again? Someone is driving up the price.

      • 1 Reply to lner2512
      • The daily trading volumes of the companies I watch are generally about 30% lower than normal. I don't see any longterm hiring happening yet.

        KCS share price benefited because:
        1. its share price was much more elastic than its peer group because about 25% of its shares were liquidated by hedgies--i.e. the bounce back resultant from an oversold position was much more evident.

        2. it is the only railroad that is developing a new market (i.e. Victoria/Rosenberg, allows it to compete with the cross border trucking business in that corridor). This gives it an increasing weekly carloading count.

        3. the resolution of the battle between Ferromex/KCSM trackage rights.

        beagle

 
KSU
114.26-0.26(-0.23%)Aug 21 4:01 PMEDT

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