View From the Gun Port - some changes made

Compass Minerals Int'l (CMP) SOLD


Mea culpa. The payout ratio was far too high. I am also concerned that cash-strapped govenments may cut back on road salting despite liability concerns. Most important, cash from the sale will be used more profitably in other ways (I hope). 


Canadian National Railway (CN)


A strategic review of CN reaffirmed my faith in the positioning of this company.  It also led me to make two other investments.  

In the past quarter, CN recorded record revenues and boosted its dividend by 15 percent. This has been reflected in the price of its shares. Most important, the company reported a 1.1 percent improvement to the all-important operating ratio to 63.6 percent. This is a key metric for rail companies.  The outstanding performance of CN in this regard is the legacy of its previous leader, Hunter Harrison, who may yet work his magic on Canadian Pacific. Judging from the run-up in the share price of CP, many investors believe in him.


A recent review of rail transport and the movement of crude oil led me to take a long look at rail car companies. I invested in one of them with the thought that the market for tankers, especially, has yet to run its course. The company, Trinity Industries (TRN), has not been listed in the Financial Log Book.  Along with the company noted below, I will leave it to readers to do their own analysis.  The company's web site provides a nice primer on rail transportation and there is a wealth of equally good information which is readily available on the Internet.  


I also established a position in HollyFrontier Corporation (HFC) as a result of looking at flows of oil in the interior of North America. Although the price of this stock has increased significantly in recent months, I figure that it has room to rise yet higher. The company pays a nice dividend. Here is an article that you can use as a start to your investigations.
http://beta.fool.com/foolsolo/2012/06/12/holly-value-oil-frontier/5588/


Whether or not the company can maintain its current levels of profitability is an open question. A downturn in the economy and lower oil prices would have a negative impact. Over time, the growth in capacity of pipelines in America's heartland may also have a negative impact on profitability.


To date, both investments have been profitable. I do not regard them as long term holds.