Study Group: Powder River Basin Coal Experts

GLG News^SM Analyses by this Study Group's Leading Experts(?)

Mr. Buffet, buying a real railroad is not like in the board game.

November 6, 2009

Analysis by:Toby Kolstad, President,

Analysis of:Buffett: Railroad business is 'in tune with the future' | www.usatoday.com

Hardly anyone can resist the temptation to by a railroad in the game of “Monopoly.” They are reasonably priced, have OK earnings potential, and if all four are owned, they have outsized rental rates and the payment rates with sites on all four sides of the board. In real life however, railroads are rarely cheap compared to their earnings and the STB will keep anyone from owning more than one. So why would such an astute investor as Warren Buffet purchase one?

Freightcar America has a strong balance sheet; but that’s all!

October 3, 2009

Analysis by:Toby Kolstad, President,

Analysis of:FreightCar America: A Long-Term Bargain Today | stocks.investopedia.com

Freightcar America is a fine company with an old pedigree and a reputation for producing some of the best coal cars in America. Although the company has no debt, it also has few prospects for growth, since it seems that almost everyone, want to decrease coal usage in the future. While it has designs for other car types, it has never produced any of these in sufficient quantities to offset any substantial decline that it may be facing in its coal car business.

Continued Rise in rail traffic is far from certain

September 28, 2009

Analysis by:Toby Kolstad, President,

Analysis of:Back On Track? | finance.yahoo.com

The weekly AAR railroad traffic report is an excellent real-time indicator of the health of the economy. Unfortunately, the volume changes, even when measured over many weeks, are generally so small that they are dismissed by most observers. Moreover, the freight rate increases pushed by the railroads during the past few years have blurred the falling traffic levels behind a screen of rising revenues and profits.

NS is tooting is own horn too loudly on fuel efficiency!

September 16, 2009

Analysis by:Toby Kolstad, President,

Analysis of:Norfolk Southern's Sustainability Report Highlights Carbon Footprint, Improved Fuel Economy | finance.yahoo.com

Norfolk Southern rightly claims that it has increased it fuel efficiency by 10% during the past ten years; but that achievement is less than half of what the other major carriers in the U.S. have achieved during the same period. The BNSF has notched a 24% gain, the UP has made a 23% improvement, and its Eastern competitor, CSX has managed a 17% in just the last seven years. So what is there to brag about?

If rail volumes are up by 8%, why are earnings forecasts up 20%?

September 15, 2009

Analysis by:Toby Kolstad, President,

Analysis of:The planes, trains and automobiles rally | money.cnn.com

Freight transportation volumes and freight company earnings have always been a good indicator of how the overall economy is doing, and the current transport trends appear to be support the conclusion that the economy has stopped contracting and is now expanding. However, with rail traffic up only between 4% and 8% on the four largest US carriers over the totals posted for the second quarter, why are earnings forecasted to grow by 18% to 25% from the same period?

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