The transportation sector of the United States economy is composed of nine industrial groups. One particular group moves more volume of tonnage based on ton miles than any other form of transportation – Railroads. In accordance with the Federal Department of Transportation, railroads move 39.5% of all freight in the US (based on ton miles which is the length freight travels). It’s a $60 Billion industry with over 140,000 miles of track. It is dominated by seven major carriers (referred to as Class I Railways).
The following articles articulate this investment pool and provide all the decision model justifications, formulas, changes and reasoning for the respective buy/sell model. You must be a member of the Value Investment Club in order to access the respective articles and the buy/sell model. Click here to join: Membership.
The following graph illustrates the performance of this pool during the first year. In effect, this pool outperformed the market by a factor of 3.5. Furthermore, it was able to achieve this with only FIVE full cycle transactions.
Sold 49.060606 Shares of Norfolk Southern Railroad for a 14.97% Annual Gain
On 09/14/2020, Norfolk Southern’s price hit $220.13 at opening. I set my sell point via an automatic sell at $219.88 and thus the shares automatically sold at $220.13. After paying a $1 per share fee, the railroad fund that I write about on this ...
Sold PUTS on Railroad Stocks
Today, I sold 59 PUT options for Union Pacific with a strike price of $170.00 with a final date of February 19, 2021. I’m simply selling insurance that if the stock price drops to $170 per share, I will have to buy them from the owner of the puts. Today, the ...
This morning at the market opening, the railways pool of the Value Investment Fund purchased 98.2849 shares of Norfolk Southern at $202.49. Altogether, including transaction fees of $1 per share, the fund invested $20,000. This post also explains that the dispersion values increased from 8% decrease in price from prior peak to 10% decrease. This is a result of the Lessons Learned article posted earlier this week. Value investors use financial analysis to substantiate their respective decision models for investments and pools of investments.
From the Lessons Learned article posted a few days ago, in order to gain higher returns, the investment model needs to have greater dispersion with my buy/sell trigger points in its model. Last year, the buy/sell triggers for Union Pacific were a 17% market price decrease from the prior peak and to sell at 100% of prior peak.
This purchase point is driven by the model update whereby market price decreases must hit 18% decrease and the sell point increases to 102% of the prior peak price. This post covers the model update and the associated dollar amounts tied to Union Pacific.
Value investing is about buying low and selling high. The investor creates a model to set buy/sell triggers and exercises this program with investmetns. Back on October 29, 2020, the Railways Pool of the club's Value Investment Fund purchased 114.9557 shares of Union Pacific at $173.98 each including a $1 per share transaction cost. In that post, the sell point was set at $215.17 which occurred this morning in the market. Union Pacific actually cleared $221 at one point this morning.
The fund's preset sell, automatically sold when the price hit $215.17. The fund netted $214.17 per share after paying a $1 per share transaction fee.
The return on the investment is $40.19 per share as follows: