Railroad Fund – Status as of 12/31/19

It’s the end of the quarter and time to report on the railroad fund. The fund started on 10/21/19 but I’m resetting the fund’s timing to the end of the quarter so that future quarterly reports tie to actual calendar quarters. The market value of the fund is $10,392.74 and I started out with $10,000 71 days ago. Thus, I’ve earned approximately $5.53 per day since inception. My cost basis is currently $10,270.32 driven by one sale of stock on 11/15/19 and receipt of dividends.

I sold Canadian Pacific because it reached my target sales price. I bought the stock on 10/21/19, the first day of the fund for $219.99 including a $1 per share transaction fee and sold it on 11/15/19 for $241.47 along with a cost of $1 per share netting the fund $240.47 per share. The gain per share was $20.48. Since I only invested $2,500 into this stock, my total gain was $232.74. Also during this quarter, I earned $37.58 in dividends, therefore my total growth equals $270.32.

The current fair market value of the fund is allocated as follows:

  • CSX Railroad 103.60774 Shares at $72.36 for a total of                     $7,497.06
  • Norfolk Southern Railroad 13.52375 Shares @$194.13                        2,625.37
  • Cash                                                                                                           270.32

Total market value is $10,392.74 (1 penny mathematical difference). My current target sell prices are as follows:

  • CSX  – $80.52
  • NSU – $206.46

Thus, since inception, this fund is growing at a slightly higher rate than 20.13% annualized.

If you have been following along so far, there are only six Class I railroads that are currently publicly traded. There is a seventh, but the entire railroad is currently owned by Berkshire Hathaway. All six are truly comparable as none deviate from the primary business of transporting goods.

This fund uses value investing principles centered on business ratios to make buy/sell decisions; the value investing principles I advocate for long-term steady growth. The fourth quarter and annual results will be out in early February and I’m looking forward to evaluating the investments and comparing all six again. Right now the market is performing well, all six railroad companies are doing well in the market and all six are at or near the historical highs.  No railroad is currently depressed in price offering a buy opportunity.

Looking forward to some great year end information. ACT ON KNOWLEDGE.

Value Investing

Do you want to learn how to get returns like this?

Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

  1. Risk Reduction – Buy only high quality stocks;
  2. Intrinsic Value – The underlying assets and operations are of good quality and performance;
  3. Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
  4. Patience – Allow time to work for the investor.

If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above. 

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:

  1. Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
  2. Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
  3. Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.

Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

  • Lessons about value investing and the principles involved;
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  • Charts, graphs, tutorials, templates and resources to use when you create your own pool;
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