Proxy vote

Cowford wrote:Conrail_Engineer - that was meant as a rhetorical question. And CSX is hardly a dog. Industry innovation leader - no way. Laggard - sure, in many areas. Room for improvement - definitely. But consider the changes since 2003: revenue up 32% (but costs up only 10%), operating income up over 400%, the stock up 400%... If this IS a dog, define what isn't.

How about "a company that doesn't defer maintenance to declare record profits?" Remember, the Pennsylvania/Penn Central declared healthy dividends right up until it filed for bankruptcy.

Yeah, yeah, I know - the company's spending X million dollars on tie replacements, etc. This is long overdue - and it's still superficial compared to what's needed, such as renovation of track drainage, replacement/repair of welded rail with numerous bolted patches, and so forth.

And locomotives that are hustled out of engine houses with duct-tape-and-baling-wire repairs. And so forth...

As I said, they make some valid points for improvement, particularly with some of their board change recommendations and compensation alignment to industry norms, but some of their conclusions are spurious at best. (After all the complaining about bad track conditions on this forum, I find it hard to believe many in the T&E ranks will subscribe to TCI's claims about track condition [Pgs 65-66 of their whitepaper] and the need to SLASH capx. According to TCI, CSX's physical plant is second to none!)

Puffery. They won't get traction by damning the whole operation. What I see is that it's lower than most nickel-and-dime short-lines; not fit for the high-volume operation they're trying to run on the former NYC mainline.

And you may not agree with some- or most- of their decisions, but I'm not sure who in senior management positions doesn't know railroading. Oscar Munoz, the CFO, is the only "non-railroader" (from AT&T), and one could argue that he is the most innovative of the bunch.

I don't know what they know. I think many of their decisions are shortsighted and foolhardy...but if your aim is to put together a healthy quarterly report, they make some sort of logic.

But they're not running it like railroading was their priority, over producing pleasing numbers.

CR_engineer... with all due respect, your last post was pretty confusing.

CSX's annual capital spending has increased over 100% in the last five years. And it's BILLIONS, not millions. And you say it's superficial? Most would disagree with you but regardless, my point was that TCI want to significantly CUT capital spending. I'm assuming you would disagree with TCI on that point.

And one thing needs to be made perfectly clear: The FIRST priority for (place railroad name here) is to maximize financial return for its shareholders. Period. How you do that in this business is "good" railroading... and how you define good railroading is what this CSX vs. TCI debate is all about.

Cowford wrote:CR_engineer... with all due respect, your last post was pretty confusing.

CSX's annual capital spending has increased over 100% in the last five years. And it's BILLIONS, not millions. And you say it's superficial? Most would disagree with you but regardless, my point was that TCI want to significantly CUT capital spending. I'm assuming you would disagree with TCI on that point.

That's not the way I read it. They're asking WHY?! WHY the huge increase in capital outlays, if PREVIOUS statements that they had "adequate" capital-improvement spending?

What they're saying is, someone was lying. Was it then or now?

And that is a valid point.

And one thing needs to be made perfectly clear: The FIRST priority for (place railroad name here) is to maximize financial return for its shareholders. Period.

Agreed.

How does running things into the ground, to keep within fantasy quarterly budgets, help anything other than meeting unrealistic objectives?

You have to spend money to make money. If you stop spending money and take it out of your business...you look good, for a little while. But in a few years, you look like Studebaker...you look extinct.

How you do that in this business is "good" railroading... and how you define good railroading is what this CSX vs. TCI debate is all about.

"Good" railroading spends money on WHAT IS NEEDED so that the property is preserved to where an expected level of service can be offered.

"Bad" railroading lets the physical plant decline - and with time, service is burdened with slower movement, delays due to equipment failure, even problems with inadequate manpower.

"Good" railroading recognizes that its mission is to provide reliable, effective transportation. "Bad" railroading may see its mission as meeting earnings predictions or dividend demand - regardless of the business's needs for ongoing investment.

To the Widow there is nothing as perfect as her deceased husband.

To the former ConRail there is nothing as perfect as the deceased railroad.

Did Conrail FAIL?

Or was it attractive enough that, between the two bidders, they paid about four times what it was worth?

When you go buy something...you don't buy JUNK. The car you bought probably wasn't scrap that you got because it was cheap.

NS and CSX bought Conrail, and overpaid, they were so eager to have it. But in the case of CSX, they threw AWAY much of what they were buying, a well-tuned operation.

And still the insular management team resists all criticism and pays themselves out of proportion.

TCI is saying: CSX consistently over-estimates volume expectations and over-invests in a plant as a result. TCI proposes to cut capex and divert that capital allocation to increase returns and for stock buy-backs.

To quote from TCI's presentation:

"Is there significant deferred maintenance liability? Data says (sic) no."

"CSX does not appear to need 'catch-up' maintenance capex"

"Network performance doesn't indicate deferred maintenance either"

Bitch about CSX management all you want (a lot of it's deserved), but be careful what you wish for... TCI wants to DOUBLE CSX's EBITDA. If they can do that while AT THE SAME TIME continuing needed immediate and long-term capital investment, buying back stock, etc... don't think for a minute that the rank-and file would come out of that scenario unscathed.

TCI wants the money they can extract from CSX -TODAY!

What happens to the wrecked shell of a company the day after they cash out their interest is not their concern.

And your basis for that statement is, what?

Can you show us another business that TCI gutted or greenmailed?

I've heard the union LCs putting out that spin, too. Oh, the union...the union that rolls over dead when CSX shaves our paychecks; the union that stands there while our working conditions go into the sewer.

I'd want a more credible source than that.

A Hedge Fund is a purely financial entitey. The do not make a 'hard' product, they do not sell a 'hard' product. They buy and sell money. The fund has very few 'employees', just enough to keep an accurate accounting of their holdings. Their aim is to buy properties through financial control as cheaply as possible and sell off what they can of any 'loose cash' and ultimately their control of the companies as dearly as possible thereby maximizing their return. Hedge funds seeking controls of companies with a minority of ownership are not in the transaction for the long term health of the companies they are involved with...they are in it for the short term return on their investments.

CSX needs change their the worst railroad to work for since Tony Ingram was hired. They are anti-labor, violate every union agreement, safety is a facade, and only making money because of increases in fuel surcharges. I have worked for this railroad starting on the C&O/Chessie System for 31 years and it's a joke they could do better if the harsh treatment of it's employees wasn't tolerated under the present administration in JAX. Today I still give them 100% but let them make all decisions I will not go beyond nor my fellow railroaders to bail them out a 40 minute move now takes 4 hours. Micromanagement from supervisors who are railroad ignorant has led to a revolt by T&E. I for one will vote on the blue card nominations it's time for change. Ward and those in the ivory towers are just another John Snow lining their own pockets while not spreading the wealth and rewarding those who actually are on the front lines the union workers who make this railroad run. The unions aren't blameless they too have been corrupted that's evident by every UTU/BLE General Chairmen who is voted out runs to CSX to work in labor relations and the unions not willing to fight but instead settle for peanuts in a time of plenty. We as union members are to blame also for only 51% voting on contracts then those non-voters having the nerve to complain they have forgotten we are the union. The only thing I'm gratiful for is I only have 6 more years till retirement it's 6 years to long.

mmi16 wrote:A Hedge Fund is a purely financial entitey. The do not make a 'hard' product, they do not sell a 'hard' product.

Hedge Fund

A hedge fund is a private investment fund that charges a performance fee and a management fee. Typically open only to qualified investors, hedge fund activity in the public securities markets has grown substantially, as they account for approximately 10% of all U.S. fixed-income security transactions, 35% of U.S. activity in derivatives with investment-grade ratings, 55% of the trading volume for emerging-market bonds, as well as 30% of equity trades. Hedge Funds dominate certain specialty markets such as trading in derivatives with high-yield ratings, and distressed debt.[1]

Alfred Winslow Jones is credited with inventing hedge funds in 1949.[2]

In the United States, for an investment fund to be exempt from direct regulation, it must be open to accredited investors only and only a limited number of investors can belong to it. While there is no legal definition of "hedge fund" under U.S. securities laws and regulations, typically they include any investment fund that, because of an exemption from the types of regulation that otherwise apply to mutual funds, brokerage firms or investment advisors, can invest in more complex and riskier investments than a public fund might. Hedge funds managed from other countries have similar relationships with their national regulators. As a hedge fund's investment activities are therefore limited only by the contracts governing the particular fund, it can make greater use of complex investment strategies such as short selling, entering into futures, swaps and other derivative contracts and leverage.

As their name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come in modern parlance to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase risk, and therefore return, rather than reduce it.

Hedge funds have acquired a reputation for secrecy. Being outside the regulatory regime that applies to retail funds greatly reduces the information a hedge fund is legally required to make public. Additionally, divulging trading methods and positions would compromise the business interests of many types of hedge fund, tending to limit the information they want to release.[3]

Not much different from any other sort of mutual fund...except perhaps in criteria of businesses chosen for investment. Note that equity they tend to buy (stocks) tends to be of the "distressed" variety.

That fits CSX to a "T."

MOST stock today is held in mutual funds. It's one reason why so many corporations are out of control...the Directors, who are only employees of the shareholders, act as a law unto themselves.

I believe you're confusing Hedge Funds with venture-capital or investment-banking outfits.

There are differences:
Mutual funds are typically public, i.e., open to all that want to invest in the fund. Hedge funds are private.
Mutual funds tend to be passive. Hedge funds tend to be more activist. Mutual funds are fairly straightforward... Hedge funds are complex based on financial instruments (derivatives, etc) that are used to offset investment in riskier areas.
Most stock is NOT held by mutual funds. Pension funds hold a good deal as do insurance companies, banks, other private institutions and individuals.

Could you define "distressed?" Considering that CSX is generating record revenue, profits, investing massive capex, and can boast of a 400%+ stock rise in the last five years... you may not like the management, but I can't see how you can objectively define CSX as distressed.

Cowford wrote: Considering that CSX is generating record revenue, profits, investing massive capex, and can boast of a 400%+ stock rise in the last five years... you may not like the management, but I can't see how you can objectively define CSX as distressed.

From an employees point of view CSX is mediocre. Years ago we had true empowerment nobody had to micromanage. Road train conductors/yard foremans got their paperwork and knew exactly what to do. If they didn't they lost their promotions and went back to a brakemen. In todays railroad with it's quickie training programs new hires aren't taught to be self reliant to think on their own every move is micromanaged. It's not the newbies fault but it has slowed things down. CSX is mediocre if it wasn't it would be right up their with the BNSF as a hot stock to buy. Profits are being made because of fuel surcharges an industry wide pricing for shipping with the AAR. In most cases we do have a captive customer in the products of coal, grain, and 85% of all chemicals. If CSX wasn't making record profits corporate would be complete morons they can do a lot better.

And you think any of that will change with TCI?

They don't care about the long-term health of labor, or the company.

conrail_engineer wrote:And your basis for that statement is, what?

Can you show us another business that TCI gutted or greenmailed?

I've heard the union LCs putting out that spin, too. Oh, the union...the union that rolls over dead when CSX shaves our paychecks; the union that stands there while our working conditions go into the sewer.

I'd want a more credible source than that.

Well not quite TCI but close. One of TCI's biggest backers, and someone one has purchased A LOT of CSX stock since TCI has got involved is Carl Ichan. He pretty much gutted TWA when he owned it. After he sold it all of its profitable routes he kept the money for himself. When he sold it off it was a shell of its former self, unable to compete anymore in the airline buisness. He smells blood with TCI and is trying to get his piece of the pie too.