Dakguy201 Paul_D_North_Jr On the other hand, a near-miss like this is a good scare to keep the Boards of Directors and managements in line with some attention to the shareholders and performing, instead of building cozy little empires with lots of perquisites for themselves (compare GM). Paul has it right. There is nothing like the wolf pack nipping at your heels to concentrate your attention on doing your best.
Paul_D_North_Jr On the other hand, a near-miss like this is a good scare to keep the Boards of Directors and managements in line with some attention to the shareholders and performing, instead of building cozy little empires with lots of perquisites for themselves (compare GM).
On the other hand, a near-miss like this is a good scare to keep the Boards of Directors and managements in line with some attention to the shareholders and performing, instead of building cozy little empires with lots of perquisites for themselves (compare GM).
Paul has it right. There is nothing like the wolf pack nipping at your heels to concentrate your attention on doing your best.
What I wrote may have seemed a little harsh when applied to Mike Ward and CSX - I think they're doing pretty good in "coming from behind" as they took over from the John Snow-job tenure in the eastern US competition with NS ("horsey-rail" as someone else called it).
But in general, for acceptable performance and standards in almost every field of human endeavor, I believe that everybody needs to be accountable or responsible to another person or organization, in some way or fashion, sooner or later - and sooner and directly is better. Otherwise, that's an absolute power situation, and we should all know by now where that leads ("corrupts absolutely", as a reminder). For too long the corporate governance process has been insulated from meaningful accountability, and as selfish and short-sighted as the TCI moves were, at least they probably served to wake some people up (not only at CSX, either).
A famous saying from a Japanese poet, Bash'o: "A few fleas is good for a dog. Otherwise he forgets that he's a dog." Well, enough philosophy for the morning (and with apologies to those who study or are trained in that academic discipline, because for sure I'm not !).
- Paul North.
Given the bad blood between TCI and CSX would CSX not be doing a hoola dance at this news?
Jeff's post above about TCI needing the cash is likely on the mark, I believe, based on the following:
After my post yesterday, I saw an article in yesterday's Wall Street Journal about the furor over Chesapeake Energy's HUGE $100 million revised compensation package for its chairman, Aubrey K. McLendon. In brief, McLendon had borrowed money to buy a lot of shares as he was entitled to do , but as the shares' market value declined during the stock market meltdown last fall, his lenders imposed "margin calls" = "pay back the loan NOW" (which those kinds of lenders can do legitimately). As a result, McLendon had to sell his shares quickly to raise the money he needed to pay back the loans, and so either his profits ("gains") vanished, or he incurred actual losses - hence the boost in this year's pay package to compensate. Search for "Chesapeake Energy" and "McLendon" - or pick up any current newspaper or business magazine - and you'll likely see more on this.
Anyway, it is quite possible that TCI had the same problem - bought its CSX shares with borrowed money ("leverage"). However, after the proxy fight early last year (2008), TCI then had to sell all of its shares to meet a margin call. If they had owned 17.8 million shares as posted above, and suffered a per-share loss of $10 per share, then that's about $178 million of loss / damage that was inflicted by those margin calls - wow ! While I don't feel too sorry for TCI and its partners - they're all "big boys" now - if such a precipitous action was in fact initiated by TCI's lenders against TCI's CSX stock, then that seems kind of like the capitalistic version of cannibalism (eating your own) to me - or at best, a self-inflicted wound or maybe fratricide (injuries from "friendly fire" or "blue-on-blue" engagement). Not very impressive, anyway.
Paul_D_North_Jr On the other hand, a near-miss like this is a good scare to keep the Boards of Directors and managements in line with some attention to the shareholders and performing, instead of building cozy little empires with lots of perquisites for themselves (compare GM). .
.
I saw a little item about TCI selling off it's CSX investment. Made it sound like TCI was having problems and may have needed some cash, maybe just the impression I got. At least one of the principles involved in TCI still owns some CSX shares privately, apart from the TCI investment.
Jeff
petitnjThey bought the stock at about 40 and sold it at 30. With their great guidance, the stock price only dropped 25%. Now that the stock is on the rebound, these geniuses are selling. I am sure that CIF has lots of experience in railroading and their input was most welcome.
Couldn't happen to a nicer bunch of guys ! Good example of Wall Street's concept of "long-term" investing = anything over 48 hours. You have to wonder, "What were they thinking ?"
From my bitter experience with these types, this kind of performance is about typical. [Get a dartboard and/ or some monkeys if you want to do as good as they do.]
Articles say that the guy who was responsible for this - supposedly an expert on US rail stocks - left the firm a couple of months ago, and it looks to me like this Chris Hohn guy will be the captain who goes down with the ship.
Link to the Wall Street Journal's article on this, via Google News (the WSJ's article direct is "subscription only"):
http://online.wsj.com/article/SB124089296140862799.html?mod=googlenews_wsj
petitnjI am sure that CIF has lots of experience in railroading and their input was most welcome.
Ah, yes. To make the railroad more profitable, you should never take money that can be paid as dividends and use it to maintain and/or improve the property. When I learned that the CIF wanted less money put into maintenance/improvement, I had the impression that they were not looking for a longterm investment, but an opportunity to milk the property and then get out after it stopped paying dividends.
Johnny
Timing is everything and in this case The Children's Fund didn't have any.
Of course, it would have been more "geniuser" if they had sold CSX short...for the $$$ I mean. - a.s.
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