| Are the Days of Riding Buffett's Coattails Ending? Maybe Not Larry MacDonald submits: Now that Burlington Northern (BNI) is up 30% on a takeover by Warren Buffett’s Berkshire Hathaway (BRK.A), some people have sent in congratulations for recommending the stock in a May 4, 2009 blog post. Thank you very much but I didn’t see the takeover coming; I was thinking it could take two or three years for Mr. Market to bid it up that high. Complete Story » seekingalpha.com |
Twin Disc Will Likely See Material Gain as Pension Asset Values Reverse Course Saj Karsan submits:What a difference a year can make! Last year at this time, as the market set low after low, investors were cautioned to be aware of companies with defined benefit pension plans. Since shareholders are on the hook for the pension obligations, any drop in pension plan assets (as a result of the market declines) should result in a drop to a company's valuation.This year, the opposite effect is taking place. As companies with fiscal years ending on December 31 will release their annual reports in the coming weeks, companies with defined benefit plans will likely see improved financial positions! Since pension asset values are only reported once a year, investors using 3rd quarter reports are likely underestimating the value of their companies under study. In other words, companies with defined benefit plans are likely worth more than investors are giving them credit for. As an example, consider Twin Disc (TWIN), a company we discussed as a potential value investment last year. Last year, the value of the company's pension assets fell by $24 million, pushing the company to cease accruing pension benefits for employees. For a company with a market cap of just $100 million, this change in the value of its pension assets is clearly material to the value of the stock. Since the broad market has gained significantly in last several months, Twin's assets have likely experienced a material gain as well. Unfortunately, until the 10-K comes out (and for TWIN, that is not for several months, as their fiscal year-end is not the same as the calendar year-end), all the investor can do is estimate the gains. Unfortunately, estimating gains is not easy. While companies do disclose their planned asset allocations, determining the rise in values of private equity or real-estate investments is not an easy task. Furthermore, in the interests of conservatism, investors are cautioned from being overly optimistic when estimating returns. However, in cases where pension assets are material, recognition of this issue can help the investor improve the accuracy of his valuation.Disclosure: NoneComplete Story » seekingalpha.com |
Airlines: Load Factors Provide a New Angle Andrew Horowitz submits: If you take a look at the load factors for airlines, it can provide a glimpse into a few things. First, it can be viewed as the capacity utilization for the airline and it can also be looked at as the margin potential. It shows the amount of efficiency with respect to the total amount of seats available.March was a good month as both more people were flying and load factors were up significantly.Complete Story » seekingalpha.com |
Spirit AeroSystems Faces Call Selling optionMONSTER submits: By Chris McKhann Option traders are betting today that shares of Spirit AeroSystems (SPR) will be unable to regain recent highs. Complete Story » seekingalpha.com |
Weekly Rail Traffic Maintains Steady Growth Mark J. Perry submits: The Association of American Railroads today reported that weekly rail traffic continues to maintain a steady pace with U.S. railroads originating 299,394 carloads for the week ending Oct. 2, 2010, up 7.7% compared with the same week in 2009, but down 10.7% from the same week in 2008. In order to offer a complete picture of the progress in rail traffic, AAR reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008. Intermodal traffic on U.S. railroads totaled 240,252 trailers and containers, up 16.5% from the same week in 2009, but down 1.9% compared with 2008. Container volume last week increased 17.6% compared with 2009, and rose 5.8% compared with 2008. Trailer volume last week rose 10.2% compared with 2009, but dropped 30.6% compared with 2008.Complete Story » seekingalpha.com |