Kansas City Southern

Kansas City Southern And Market Psychology

“Davidson” submits:

Q3 hedge fund letters, conference, scoops etc

Kansas City Southern(KSU) is a lesson in market psychology. Market prices are set by what investors believe the future will look like with the perspective of current events/widely diverse perceptions. KSU, one of USA’s Class A railroads, just reported record levels of Revenue and business margins. They report a strong business climate and forecasted growth likely to continue in their perspective with strong Mexican cross-border export/import demand. A comparison of KSU’s price history with the Chemical Activity Barometer(CAB) indicates a decidedly unimpressed investor response is present in the current valuation vs. historical valuation. It is this discrepancy between strong and accelerating financial operations and market perception which creates the investment potential.

Market psychology often diverges from business returns. Identifying these situations is what produces investment opportunity, but the investment return is dependent on market psychology turning in the direction which benefits the investment decision. History tells us that investors eventually respond to the underlying returns. The issue for investors is that one may have to wait through a frustrating period of watching business returns evolve as anticipated without markets responding. KSU provides an excellent example of the investment process.

KSU reports record revenue and business margins and the context in which KSU operates as indicated by the CAB, US economic activity, is rising and perhaps accelerating. On a historical basis KSU is well below the typical pricing it has received with current business trends. History suggests KSU could rise to $300shr or higher.

Market psychology has never been predictable in its response to economics and corporate financial history shorter-term.

Kansas City Southern


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 2/29/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0