Western Railroad Discussion > CNBC, Cramer Makes Case. Why UP should buy KCS

Did anyone see the show or read the article on CNBC as to why UP should buy KCS? He has some valid points, Your thoughts? 

Here's the video of Jim Cramer's comments.  There's also text which mirrors some of the discussion on TrainOrders over the past few weeks. He believes the PSR story is playing itself out, and the low hanging fruit is in the basket already.

Mr Cramer seems to add the view that Union Pacific could either buy KSU directly, or might be a participant in the buyout group. Depending on how the regulators view either hook-up, of course.


https://www.cnbc.com/2020/10/26/jim-cramer-makes-a-case-for-union-pacific-to-acquire-kansas-city-southern.html

The Monopolies the Class 1's have been handed already isnt large enough?

I think its just rediulous that 2 of the 7 largest railroads in the US are Canadian.
No ones watching the store;  Wall street just takes the money and runs.    Im sure  makes sense from a purely  short term money perspective.   Cramer seems like a nice enough guy, but he knows nothing about RR's.  UP might as well be a widget manufacturer.  Makes no difference in his metrics.

Also, he knows to be nice and throw soft balls for his guests, or there will be no more guests.

Maybe KCS should be aquiring some lines rather than temp being swallowed?

It's certainly possible UP, BNSF and NS already have an agreement worked out as to who gets what.
I don't think the Mexican Government will agree to any kind of sale to UP without UP agreeing to give up its 25% stake in Ferromex to BNSF (or a group including BNSF).

I would think BNSF would take over the KCS line between Ft Worth and Shreveport, to connect with NS.

BNSF also has to be eyeballing the KCS main line from Shreveport to New Orleans.

Allen

Posted from Android



Edited 1 time(s). Last edit at 10/27/20 19:03 by bradleymckay.

Shreveport would not connect BNSF to NS and BNSF already has a line to New Orleans? Should have bought some KCS stock LAST YEAR!
JB

Anytime there are rumors, it's likely that various investment bankers are trying to put a deal together. Rumors are part of the process.

It wouldn't be surprising if there are some carve up scenarios, some trackage rights agreements, etc. Lots of different ideas are on the table.  There's already a money offer on the table, so the outlines of a floor price are known.

KSU is mostly owned by institutions like Vanguard, Fidelity, Blackstone (same one), American Funds, T Rowe, and other huge managers of pension funds and college endowments, etc.  I don't have the exact number in front of me, but it's probably around 80%-85% of shares.  Getting them to a deal is just a matter of price.

Same process happened at Canadian Pacific (with Pershing Square), and CSX (with Mantle Ridge).  If you get the right price, you close the deal with the institutions which control shares.  If you're cheap, and you won't ht the desired number (like the Children's Investment Fund), you don't make the deal.  It's not rocket science.

He's referring to the Meridian Speedway, so yes, Shreveport would connect to NS at Meridian. 

3rdswitch Wrote:
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> Shreveport would not connect BNSF to NS and BNSF
> already has a line to New Orleans? Should have
> bought some KCS stock LAST YEAR!
> JB

pdt Wrote:
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> Cramer seems like a nice enough
> guy, but he knows nothing about RR's. 

I've known about Cramer for ~20 years, as a newbie stock market participant reading TheStreet.com back in those days.

Your statement is probably the most accurate in the thread so far. Other TO members have mentioned in the past on how his recommendations often tank, and that's generally true, as the famed "Cramer Bounce" has lost its charm. I'm confident most people posting in this thread so far have NO IDEA about Cramer, because they are blinded by wishful thinking on how UNP stock should perform.

> Also, he knows to be nice and throw soft balls for
> his guests, or there will be no more guests.

Lance Fritz has been his guest before, so maybe Cramer is trying to help him out. Google search will often rank Trainorders discussions high, so there have been suspicious examples of financial media copying ideas discussed on TO. So Cramer "mirroring" KCS ideas on his show may not be a coincidence.

I dare UNP to buy KCS. That's my position (continuing to laugh since the Wall St. Vena praise few days ago).

cchan006 Wrote:
-------------------------------------------------------
> pdt Wrote:
> --------------------------------------------------
> -----
> > Cramer seems like a nice enough
> > guy, but he knows nothing about RR's. 
>
> I've known about Cramer for ~20 years, as a newbie
> stock market participant reading TheStreet.com
> back in those days.
>
> Your statement is probably the most accurate in
> the thread so far. Other TO members have mentioned
> in the past on how his recommendations often tank,
> and that's generally true, as the famed "Cramer
> Bounce" has lost its charm. I'm confident most
> people posting in this thread so far have NO IDEA
> about Cramer, because they are blinded by wishful
> thinking on how UNP stock should perform.
>
> > Also, he knows to be nice and throw soft balls
> for
> > his guests, or there will be no more guests.
>
> Lance Fritz has been his guest before, so maybe
> Cramer is trying to help him out. Google search
> will often rank Trainorders discussions high, so
> there have been suspicious examples of financial
> media copying ideas discussed on TO. So Cramer
> "mirroring" KCS ideas on his show may not be a
> coincidence.
>
> I dare UNP to buy KCS. That's my position
> (continuing to laugh since the Wall St. Vena
> praise few days ago).

Kramer got his hubris handed to him by Jon Stewart when Wall Street imploded the world economy in 08. Kramer seems like a ok TV talking head, but like most people that think they have it figured out he and others like him mostly talk out their a##.

Posted from iPhone

pdt Wrote:
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> The Monopolies the Class 1's have been handed
> already isnt large enough?

Been that way since the first half of the 18th century.

> I think its just rediulous that 2 of the 7 largest
> railroads in the US are Canadian.
> No ones watching the store;

Pretty stupid statement full of innuendo and fear mongering. There are only 5 Class 1 railroads in the US period. There are only 2 Class 1 railroads in Canada period. Since here is the US we are bassackwards allowing the overwhelming percentage of railroad infrastructure to be privately owned, that is what we get.

If we were to get off our behinds and decide to truly care about each other and demand that the vast overwhelming percentage of railroad infrastructure be government owned, we would be well on our way to rectifying our railroad problems.

> Wall street just
> takes the money and runs.   

That is because we the people allow that to happen, since we are the ones wanting easy money to bank roll our self centered lives.

> Im sure  makes
> sense from a purely  short term money
> perspective.   Cramer seems like a nice enough
> guy, but he knows nothing about RR's.  UP might
> as well be a widget manufacturer.  Makes no
> difference in his metrics.

Absolutely correct. Investors are worried only about making money. DUH! 
 

Speaking as a former media person, Cramer is a larger than life personality who comes across well on TV.  That's why CNBC keeps him on.  I will defer to others on his knowledge of railroads, but when he talks about companies I do know a little about, it seems he has no real clue.  CEO appearances on "Mad Money", an apt show title, are designed to get investors, small and large, interested.  My two cents worth.  

Nick Tharalson,
Mrion, IA

I hate to interrupt this high brow, high finance, Wall St Journal-type discussion. But I'm thinking like a railfan: Don't we have enough Fallen Flags!  Does the KCS really have to bite the dust... ;^)

Lance/199

Does anybody really think KCS will ever get bought up? Rumors have been flying for decades of them getting bought but it never seems to happen. 

What makes you think that the STB and the DOJ will let UP aquire another railroad? Hell you have a lot of people out there saying UP is too big right now and needs to be broken up.
Wouldn't surprise me a bit if they got hit with an Anti Trust lawsuit sometime in the future.

I think I'd rather see it go the OTHER way. Seems to me like U.P needs to be broken up and sold off either as regionals or shortlines!!!! I'm sure the service to customers ( and employees ) would improve 10 fold!!!

Government ownership of railroads?  Goodness have you seen the cost of putting a rocket into orbit by the government and now by private ownership?  Private ownership wins hands down.    And, not by just a few dollars but, many millions.    Nearly every government owned railroad in the world costs a hell of lot more to run than do private roads..

Want to see a railroad renaissance?  Don't nationalize the railroad infrastructure--instead, tell the long-haul  trucking industry that it can no longer use the federal highways.  They can either haul intermodal on the railroads or they can privately build and fund their own private road network. 

Personally, I'm not in favor of any more railroad mergers or consolidations.  In fact, there all kinds of oligopolies in this country that desperately need to be broken up using the long-ignored Anti-Trust laws.  Geographically and economically speaking, if KCS was to be acquired by any railroad, though, an acquisition by Canadian Pacific would make the most sense to me.  

I just don't like any foreign entity owning american railroads.  Its already happend with CN and CP.  But, enough is enough.

tomstp Wrote:
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> I just don't like any foreign entity owning
> american railroads.  Its already happend with CN
> and CP.  But, enough is enough.

Canada has a law which designates a wide range of key industries as national assets.  For all practical purposes, they can't be purchased by foreign corporations without a detailed review and approval by the government.  Canadian Pacific and Canadian National are in the group, as is Potash, Inc. Several, but not all, oil companies and power companies, etc.

The US and China both have a similar rule for ownership of certain technology and defense companies and key processes.  But, in those businesses, your most important assets go home every night, and could move somewhere else...