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Kansas City Southern Message Board

  • mhirschey mhirschey Jun 15, 2000 3:27 PM Flag

    Meeting Notes


    I�m a numbers

    High quality businesses and top management are
    reflected in the numbers, sooner rather than

    The numbers for KSU are outstanding. By inference,
    KSU management must either be outstanding or
    incredibly lucky.

    I�m a relatively new shareholder
    with KSU, and went to the annual meeting to get a
    sense of management quality.

    I could not be more

    A courteous but no-nonsense meeting of 48 minutes
    was conducted by Landon H. Rowland, Chairman and CEO.
    He impresses me as a smart, shareholder-focused and
    an �actions speak louder than words� type of guy. He
    is in charge, knows exactly what he�s got and knows
    exactly what he�s doing.

    He stressed the
    importance of motivating top quality managers with
    stockholder-friendly incentives, and then letting them run their own
    shows. He also stressed the importance of managing KSU
    assets in such a way as to maximize value in a tax
    efficient manner.

    Rowland is obviously on the same
    page as shareholders.

    I asked Rowland if KSU
    had plans to do a tax-free stock dividend of DST
    shares to KSU shareholders.

    Rowland replied that
    he was not free at this time to discuss company
    plans to spin off or otherwise redeploy DST assets. A
    head-table associate remarked that a tax-free dividend of
    DST would not be possible because KSU presently owns
    less than 80% of DST. Later, Rowland mentioned that he
    had no intention of letting KSU�s position in Janus
    to fall below 80%.

    What I learned:

    happy to be in business with these guys. I asked my son
    Nicholas, 17, what he thought. Nick replied: �They remind
    me of Berkshire Hathaway.� Me too.

    What I

    1. The Stilwell spin off is the beginning, not the
    end of this restructuring.

    2. The railroad is
    strategically positioned for quick sale.

    3. Janus will
    soon be separated from Stilwell in a tax-free spinoff
    to Stilwell shareholders.

    4. DST will merge
    with the remainder of Stilwell.

    Be patient,
    these guys know what they are doing.

    I bought
    more KSU at 78 � this morning.

    Mark Hirschey

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    • It's been my experience that reverse splits tend
      to be the precursor to the market turning sour on
      the companies shares and share price erosion sets
      in.Your post meets my definition of ignorance. I often
      dis- agree with other posters but try not to respond
      in such a way as to reflect on my own upbringing.
      Get it?

    • ...keep your mouth shut than to open it and
      remove all doubt to your ignorance!

      In 1 for 2
      reverse split you end up with half as many shares as you
      had before, BUT they are DOUBLED in price per share.
      SO IT IS A NET 0 difference! You have the same value
      "...after your shares have been sliced in


    • nstead, Mr. Greenberg appears interested in some
      other acquisitions in financial services --
      specifically, a mutual-fund company.

      Pointing to the $1
      billion-plus contribution to last year's pretax operating
      profit by SunAmerica, AIG's main asset-management
      business, he says, "Keep looking at that line on the income
      statement. It will grow ... . We will acquire companies to
      get us where we want to be."

      Mr. Greenberg's
      unusually blunt comments came in a May 18 speech at the
      giant annual confab of the Investment Company
      Institute. In the eyes of many mutual-fund executives, the
      comments amounted to AIG hanging out a "Wanted" sign for
      mutual-fund assets. Since then, AIG has been identified as
      having been a bidder for Pioneer Group Inc.'s Pioneer
      Investment Management unit, which an Italian bank bought for
      $1.2 billion. While AIG ultimately dropped out of the
      bidding for Pioneer, AIG officials acknowledge that they
      are examining other possibilities.

      But on
      various occasions recently, Mr. Greenberg has reiterated
      his lack of interest in either Wall Street or in
      buying a commercial bank, another oft-rumored
      acquisition target for AIG. Mr. Greenberg's biggest
      objection: A securities business has way too much earnings
      volatility to join the AIG family, whose stock is a Wall
      Street darling partly because it has such steady growth
      in net income (about 13% a year throughout the
      '90s). Also, such an acquisition could create
      "important" cultural and compensation clashes, he told the
      ICI gathering.

      As for commercial banks, he
      sees no need to pay for one when marketing pacts can
      be readily struck. While the federal barriers
      separating banking, insurance and securities businesses have
      been dropped, Mr. Greenberg said that cross-marketing
      opportunities are available without doing a full-blown

      AIG ramped up its exposure to the asset-management
      world a year and a half ago by buying variable-annuity
      specialist SunAmerica for $18.5 billion in stock, and it now
      has $34 billion under management. In an interview,
      SunAmerica Chairman Eli Broad notes that he and other AIG
      brass are casting their net widely for fund firms,
      considering both retail (geared toward individuals) and
      institutional money managers, those with a well-known brand
      name and those without one.

      Steve Neamtz, chief
      executive of AIG Asset Management, a unit seeking to spread
      SunAmerica's funds abroad, has been looking at fund groups
      specializing in "the stuff that's been working" in the
      mutual-fund world, including technology-sector expertise and
      the "aggressive growth" style of investing in
      unusually fast-growing companies.

      He notes that
      the funds of the tech-heavy Janus Capital Corp.,
      majority owned by Kansas City Southern Industries, "meet
      the criteria" of consistent performance that AIG
      wants. But Janus, with some of the hottest funds over
      the past several years, also epitomizes a major
      hurdle for would-be acquirers: "God only knows what the
      price would be."

    • <EOM>

    • I agree with you and have been saying all along.
      Did you know SV also owns hundreds of thousands of
      CSC and a major Boston Bank, the name escapes me. I
      agree with the railroad being bought out, its assest is
      one of a kind and recently tracks were
      upgraded/replaced. One share DST to every 22 SV shares would be
      about correct if distribution would to take happen.

    • Your post are very impressive, can you give any idea as to what would happen to the preffered stock, Par $25.00, if KSU should be sold after the split. Today it is selling for $19.00?

    • If I seemed aggressive.

      Nelson is not a
      mutual fund manager. It does not have Janus-like
      performance and track record. It cannot be valued on the same

      Neither can the other businesses- which may explain why
      Janus management don't want them.

      If SV did spin
      off Janus, ask yourself what would be

      What did they pay for these things and when. Given
      that they are not Janus, have they appreciated so much
      since then?

    • Thanks Mark for you good post. Read the CSFB report they are also bullish with $110 target. Bought today for one of my IRA, long term.

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