The FinancialContent Network     SocialPicks Community   |   MarketMinute Monitor   |   MarketMinute Market Updates   |   MarketMinute Stock News
SocialPicks
   Sign Up   |   Log In   |   What is SocialPicks?     
9 pts

Opinion on  Burlington Northern Santa Fe Corp (BNI)     Sector: Transportation  >  Industry: Railroads
A Global ETF Strategy for Transports

Oct 12, 2008 02:52 PM GMT
Mikerun
Return Risk
+1.04% LOW
Principal

A Global ETF Strategy for Transports

Transports have provided a safe haven for investors with the iShares Dow Transports ( IYT ) registering a small gain over the past year in spite of a meltdown in financials and sharp losses in the overall market averages, before the recent market meltdown. The gains in the Dow Transport ETF were largely the result of a strong performance by the top four U.S.-based railroads by market cap, which account for over 30% of the stock holdings in IYT.

As evidence of increased commercial interest and product development ofglobally-focused transport ETFs among major providers, the following ideas have recently been either launched or filed: Claymore/Delta Global Shipping (SEA - launched in Aug), PowerShares Global Progressive Transportation (PTRP - launched in Sep), and SPDR Transportation (filed with SEC).

I think the increased interest by investors in transports warrants commercial development of focused ETFs in the following segments on a global basis:

1.) Railroad: A bullish segment due to pricing power as a result of limited ability to add capacity and increased demand for fuel efficient transport of energy and agricultural commodities.

2.) Short Maritime: There is now a long ETF for investors and traders as of the 8/25/08 launch of Claymore/Delta Global Shipping ( SEA ). However, with the Baltic Dry Index down 42.8% over the past year on concerns of a global slowdown and the high volatility of shipping stocks; a short ETF may be a good idea at this time.

3.) Short Airline : Although the industry is getting a lift from falling oil prices and presents an excellent trading vehicle due to high volatility, Southwest Airlines ( LUV ) is the leading company and only long-term investment vehicle I would consider as a hedge to an overall short position.

4.) Short Trucking: The top five companies by market cap in the trucking, air freight, and ground delivery segment account for over 50% of the entire global index of 49 companies with market caps over $250M US Dollars which have posted a loss of over 20% in the past year on a market cap-weighted basis (click to enlarge chart, above). As a long position and hedge to a short on the overall segment, I would consider Ryder System ( R ) as a long-term investment in this group based on its truck rental/leasing and supply chain management business model.

5.) Short Autos: Investors are familiar with the struggling U.S. auto makers, Ford (F) and General Motors (GM), but even industry leader Toyota (TM) is down over 45% in the past year. Also, breaking news last night suggests GM and Chrysler are holding talks for a possible merger.


BNI:  This call was made on 10/12/08 @ $82.98
Rating:   Positive   $82.98 (10/12/08)
Closed:   10/17/2008 @ $79.66 (-4.00% in 5 days)


Add Comment

Be the first to comment on this story and earn 2 points.

Your Comment



ROCK-STAR INVESTORS
Rank Name Sharpe Ratio Avg Return Followers
1 21.10 +35.25% 368
2 18.14 +70.90% 206
3 17.66 +25.78% 53
4 13.47 +14.32% 60
5 12.13 +69.23% 34


POPULAR STOCKS
Symbol Company Name Sentiment

TODAY'S HEADLINES

TODAY'S TOP PICKS

 
Burlington Northern Santa Fe Corp (BNI)
   SocialPicks Sentiment:   

   This Quarter's Sentiment:
All:
89.0%
Top:
75.0%




Latest Picks by Mike Havrilla
Symbol SP Sentiment Rating Return Since
EXAS Positive -0.76% 11/07/09
NFES N/A Positive n/a 11/07/09
IMUC N/A Positive n/a 11/07/09
ESALY N/A Negative n/a 11/04/09
PFE Negative -0.53% 11/04/09

View All >
   
Mike Havrilla previously rated BNI
Positive -0.61% Railroad Stocks Steam Ahead on Buffett’s Buy of BNI
11/03/2009
9
Positive +52.25% New Global Transport Composite Index
01/17/2009
9
Positive -12.87% Railroad Index Will Benefit from Infrastructure Spending
12/20/2008
9
Positive -5.76% An Index of Top Rated Global Transport Companies
11/16/2008
9
Positive -5.60% ETFI Global Railroad PerformIdex: Stock Prices Adjust to Lower Volumes
11/09/2008
9
Positive -5.90% Warren Buffett Is Still Riding the Rails
10/31/2008
9
Positive +10.31% Riding the Rails to Profits
10/17/2008
9
Positive -18.25% A Global Railroad ETF Update: A New Way For Investors To Ride The Rails
08/08/2008
3





IN THE PRESS
Press_forbes Press_washingtonpost Press_wsj Press_npr Press_techcrunch