Railways Pool

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 five major carriers (referred to as Class I Railways). Four of these carriers are publicly traded. The fifth, BNSF Railway, is owned by Berkshire Hathaway. A recent announcement by Norfolk Southern to merge with Union Pacific will consolidate this railways pool to three potential investments in the second quarter of calendar year 2026.

The key to success with this pool is determining intrinsic value. This is one of the few times that the discounted cash flows method is warranted in the intrinsic value formula. Once calculated, given the high stability of earnings, the intrinsic value is adjusted annually about four to five percent higher, depending on financial and actual performance in accordance with each railroad’s key performance indicators.

Since inception, six years ago as of 09/30/25, this pool has had the following activity results:

Eleven (11) full buy/sell transactions earning $44,968 in realized gains.
Nine separate sales of PUT Option contracts earning $6,736.
Received $2,742 in dividends over this six-year period.

Total realized earnings over six years equals $54,447.

For full details, download this pdf:

Railways Pool - Six Years of Activity Through 09-30-25

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The following articles articulate this railway’s pool of investments 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 to access the respective articles and the buy/sell model. Click here to join: Membership.

Historical analysis of railway stocks identifies that they are highly correlated with the overall economy, which makes sense given their strong relationship to the movement of freight. Thus, to have an opportunity to buy, the major indices must have retrenchment of some significant percentage, typically more than 15%. This is when opportunities to buy will come to fruition. Until then, a value investor can only wait.

Railroad Stock Investments – The Standard of Measurement to Buy and Sell Railway Stock
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).
Railroad Companies – A Solid and Steady Investment
These six are behemoths when it comes to transportation. All have revenues greater than $2.5 Billion per year and hold at least $4 Billion in fixed assets. The key to this investment is the asset allocation model.
Railroad Stock – Discovering Opportunities
Railroad stocks are solid and steady investments. There is limited downside risk and adequate historical data to illustrate buy and sell points for an investor.
Railroad Fund – Status as of 11/06/19
This is purely a historical record of the investment fund for railroad stocks based on the value investing concept developed using business ratios.
Canadian Pacific Railroad – Sold Stock at $241.47
Today is November 15, 2019 and Canadian Pacific Railroad recovered in accordance with my railroad fund investment model to $241.47 per share.
Union Pacific – Buy/Sell Model
Union Pacific's stock carries the highest price to book ratio among the six Class I Railways. It is about a 1.43 times factor over the next best price to book ratio of CSX at 4.73.
Railroad Fund – Status as of 12/31/19
It's the end of the quarter and time to report on the railroad fund.
Railroad Fund – Status on 01/31/2020
During the last 30 days, the fund held 13.52375 shares (original investment of $2,500) and sold them on 01/17/2020 at 9:40 AM when the price in the market hit the target under the value investment principle at $207.17.
Railroad Stocks – Analysis 02/15/2020
Every one of the six railroad stocks are at or above their all-time highs.
Railroad Fund – Update on 02/24/2020
Volatility is necessary to create market fluctuations. Market fluctuations create price disparity for either intrinsic value (buy side of the buy low/sell high tenet of value investing) or price recovery, i.e. unsubstantiated high market prices for stock.