Just When Hedge Funds Were Buying Railroads, Autos and Other Rail Freight Shipments Fall

6 de junio de 2007

<body><div id="article"><tr><td height="23" valign="middle" width="184"></td><td valign="middle" width="185"></td></tr><h1>Just When Hedge Funds Were Buying Railroads, Autos and Other Rail Freight Shipments Fall</h1><p>June 5, 2007 (LPAC)--In another marker of the falling U.S. economy, shipments of most industrial and construction products by Class 1 railroads fell sharply in the first quarter of 2007, according to sources familiar with the industry. The most notable collapse was in auto and auto-parts shipments, which are a major component of freight railroads' business, and which were nearly 10% lower than a year earlier; but "surprisingly," also coal shipments, lumber, cement, and other construction materials, plastics, steel shipments all dropped.</p><p>This reversal hits the Class 1 railroads just as a group of notoriously "activist" hedge funds had bought major positions in their stock. TCI Fund Management, Fortress Fund Management, and Atticus Capital Partners, along with Warren Buffett's Berkshire Hathaway funds--had all just taken significant stock holdings of the Class 1 railroads across the board: Burlington Northern and Santa Fe, Union Pacific, CSX, and Norfolk Southern--and of Kansas City Southern Railroad. Outright takeovers were being rumored.</p><p>The profits of these railroads had been up between 11% and 18% in 2006, and totalled $42 billion--indicating what an abrupt collapse is represented by the first quarter 2007 freight shipments.</p></div></body>