They just bought out whats left of MM&A and hold Florida East Coast. Railroads are complicated capital intensive animals. What worries me is that Investment bankers like Pershing Capital (Own CP) Fortress (Part of Black Rock) Childrens Investment (Own CSX) are just there to milk the cow dry. The only good banker in Berkshire Hathaway and Buffet who actualy likes and rides trains. BNSF is in good shape so much that its leasing its locos out to CSX
http://www.pressherald.com/news/Fortress_Investment_emerges_as_winner_of_MM_A_Railway_auction_.html
I thought CIF dropped out of CSX just after they won several BOD seats. The bad turn in the economy forced them to divest....
Somehow I do not think the MM&A property was a very good deal. When it started up,they had some good paper business. Then came along the recession and much of their traffic base was gone. What Fortress paind is more in line to the actual worth of the property. CP was in bad shape as they did not have the revenue to invest in capital improvements. In comes the 'chopping block'. Remember when CN was privatized? And the same CEO who was there, retired and is now at CP.
BNSF is a very well run railroad. Under B-H, they have great financial backing(and the 5+ Billion in capital investment shows where they are investing....)
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
jrbernier [snipped - PDN] . . . Remember when CN was privatized? And the same CEO who was there, retired and is now at CP. . . .
http://trn.trains.com/en/Railroad%20Reference/Railroad%20History/2006/06/Canadian%20National%20merger%20family%20tree.aspx
"The Canadian government privatized CN on November 17, 1995, in a C$2.2 billion initial public offering." Paul Tellier was CN's CEO then, not E. Hunter Harrison, whom I believe you're referring to - he was in no way an official of any kind at CN at the time.
E. Hunter Harrison didn't come along until the 'new' IC was merged into CN, which was a few years later: "Canadian National purchased IC on February 11, 1998 and merged it on July 1, 1999."
Thus, there was 2 years and roughly 3 months between CN's privatization, and the purchase of IC, when Harrison formally joined CN. Even allowing up to a year for the IC purchase negotiations, those events were still separated by at least a year.
That was a longer effective time than it might seem to be, because that was during the last major round of rail mergers, and lot was happening rapidly. For example, UP purchased C&NW in April 1995 and merged it in June 1995; and then purchased and acquired control of SP in August - September 1996. BN purchased and merged ATSF from Sept. 1995 through Dec. 1996. Then just after the IC merger, CN and BNSF proposed their merger in Dec. 1999, which was aborted by the STB moratorium (see http://en.wikipedia.org/wiki/BNSF_Railway ), and that was the last major merger event to the present day.
Otherwise, I think most of your observations and comments above are on-point and valid.
- Paul North.
jrbernier I thought CIF dropped out of CSX just after they won several BOD seats. The bad turn in the economy forced them to divest.... Jim
Yes - the Childrens Fund thought they knew how to run a railroad better than CSX Management, with the recession of 2008-2009 the Childrens Fund found out that they didn't know how to operate a hedge fund in a down market, let alone a railroad and sold off the bulk of, if not all, of their interests to save their own financial posterior.
Never too old to have a happy childhood!
and Yet they still have 3 board members who keeps voting these guys in unopposed
Mr. Timothy T. O’Toole (also runs Greyhound aka First Transit no
Timothy T. O’Toole, 56, joined the Board in September 2008. Mr. O’Toole is currently the Chief Executive Officer of FirstGroup, plc, a leading transportation company that primarily provides rail and bus services. FirstGroup, a publicly traded company on the London Stock Exchange, employs approximately 130,000 staff throughout the U.K. and North America and transports some 2.5 billion passengers a year. Mr. O’Toole previously served as the Managing Director of the London Underground from 2003 through April 2009, where he was responsible for operating and rebuilding the Tube, the world’s oldest metropolitan railway. Mr. O’Toole brings to the Board over 25 years of railroad industry experience. He also provides invaluable operational experience in crisis management evidenced by his leadership following a terror attack on the London Underground in 2005.
Previously, he served as President and Chief Executive Officer of Conrail from 1998 to 2001. During his more than 20 years at Conrail, he served in various senior management roles, including Senior Vice President of Law and Government Affairs, Senior Vice President of Finance and Chief Financial Officer, Vice President and Treasurer, and Vice President and General Counsel. Mr. O’Toole also serves as a member of the board of FirstGroup.
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Gilbert H. Lamphere, 59, joined the Board in July 2008. He is Chairman of the Board of FlatWorld Capital, a publicly traded private equity firm and is Managing Director of Lamphere Capital Management, a private investment firm which he founded in 1998.
Mr. Lamphere brings broad railroad experience to the Board as he has previously served as a director of Canadian National Railway, Chairman of Illinois Central Railroad before its sale to Canadian National in 1998, and a director of Florida East Coast Industries. Mr. Lamphere is also Chairman of the Board of Las Vegas Railway Express, a start-up passenger railroad which will operate between Los Angeles and Las Vegas. He has served as a director of nine other public companies, including Carlyle Industries, Inc., Cleveland-Cliffs, Inc., R.P. Scherer Corporation, Global Natural Resources Corporation and Recognition International, Inc. Earlier in his career, Mr. Lamphere was Vice President of Mergers and Acquisitions at Morgan Stanley.
paul,
I did not mean to infer that he was the CEO at the time of the privatization. But he eventually was the CEO for the final cost cutting at CN, and retired at the mandatory retirement age at CN, to be hired by CP. I met him at a technology seminar and he came across as a 'bottom line' person. His knowledge of many business parts was rather impressive(we were selling computers). The man may be thought of as a heartless rail cust cuter to many railfans, but he is rather driven at the bottom line.
BaltACDjrbernier I thought CIF dropped out of CSX just after they won several BOD seats. The bad turn in the economy forced them to divest.... Jim Yes - the Childrens Fund thought they knew how to run a railroad better than CSX Management, with the recession of 2008-2009 the Childrens Fund found out that they didn't know how to operate a hedge fund in a down market, let alone a railroad and sold off the bulk of, if not all, of their interests to save their own financial posterior.
Johnny
Polish Falcon What worries me is that Investment bankers like Pershing Capital (Own CP) Fortress (Part of Black Rock) Childrens Investment (Own CSX) are just there to milk the cow dry. The only good banker in Berkshire Hathaway and Buffet who actualy likes and rides trains. BNSF is in good shape so much that its leasing its locos out to CSX.
What worries me is that Investment bankers like Pershing Capital (Own CP) Fortress (Part of Black Rock) Childrens Investment (Own CSX) are just there to milk the cow dry. The only good banker in Berkshire Hathaway and Buffet who actualy likes and rides trains. BNSF is in good shape so much that its leasing its locos out to CSX.
Yeah, Pershing Square Capital has been terrible for CP. Only brought Hunter Harrison on board and seen CP's stock price double and its operating ratio fall into the 60s.
Of course, Pershing does not "own" CP, only a piece of it, like you (if you're smart) and I.
As for BNSF, if it does have locos leased to CSX, I'll bet it wishes it had them back to help get traffic moving again.
Not commenting on any specific hedge fund, but their primary method of operation seem to be get short term profit NOW and leave the company in the lurch. Hedge funds seem to have no interest in the long term.
Norm
BNSF does not have any locomotives leased out to CSX or any other railroad. They currently have leased in every modern high-horsepower six axle locomotive that they can get their hands on. Examples include the recently lease returned former Santa Fe SD75M locomotives, the 50 Citirail ES44AC locomotives(CREX reporting marks), some lease returned former BN SD60M locomotives(they tried to get them all back but could not), 102 newer GE locomotives from CP, plus they have 475 new road locomotives coming this year.
In this time of severe power shortages for all the Class I railroads, US and Canadian, locomotives are being used as efficiently as possible, this has meant seeing locomotives off of their home roads more than normally seen. Along the former Soo Line it seems that there are days when CSX and NS locomotives outnumber CP locomotives.
BNSF does have locos leased to CSX have seen and talked to Crews at Crew Change in New Castle PA. Also a lot of run through power. Operating Ratios is one thing getting brand new customers is another.
I would opine that more and more unit trains means more and more run-through power. It all comes home eventually.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
In Texas we are seeing everything imaginable in the line of locomotives, including BC Rail, CN and lots of warbonnets that had to have been sitting in a dead line somewhere. Anything that will still move on its own is out there on the railroad somewhere.
John Timm
BNSF kept two of the NS heritage units in the Northwest for about two months each.
Fortress got a great piece of railroad for a real bargain when it bought the Short Line: access to major ports at both ends... the shortest rail distance from Central Canada to the East Coast, a well constructed line, albeit in some need of maintenance, but at one time the crown jewel of the Canadian Pacific.
There's lots of online business just ripe for the picking too. Anyone who doesn't think so should rent a bicycle for a week and spend some time on the adjacent two lane highways... good luck trying to keep clear of the heavy truck traffic.
For some 20 million they didn't buy it, they stole it. Great investment for the right buyer.
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