Published December 29, 2025
CSX…$36.66
American railroads are in an era of consolidation. Witness the UNP/NSC merger. As you know, we’re involved in UNP.
So here is another idea in the same realm and more, this one has pressure at work to effect an “event” in the stock.
Stock hasn’t done much over the past five years:
That under performance activated the activists and as they say on Wall Street, the stock is now “in play.” In September, the CEO was taken out and replaced. The stock today is trading at essentially the same price as then, so there is no event premium wrapped into the stock price. I’ve copied below an article from the Associated Press that does a good job of laying everything out.
I guess the question is what other company is available for a merger. There are only six operating in the United States (of any size and scale) so its slim pickings. BNSF is a Buffett company, they’ve said they’re not interested and my guess is at the very least, they’re occupied with the Buffett torch passing going on.
Canadian Pacific Kansas City Limited (CP) has similarly said they are not interested. UNP and NSC are involved in their own merger. Canadian National (CN) is available, but I’m not sure the political atmosphere works there…you can imagine some Trump invective about a Canadian company stepping into that one.
So what we are probably left with is a workout to improve profitability. Given the lack of valuation inflation in the stock and given the clear mandate with a new CEO, this is a workout position, but to me attractive. I’m not sure there is very much downside in it.
In my own account, I took a 1% position via the January 2027 $30 call options. In notional terms, that would be 6% of the account value. So I’m risking 1% to see what happens here.
https://apnews.com/article/csx-railroad-ceo-hinrichs-angel-198366c5f25c40d0c46de7fdcbe7bc53
