Research Library
Below is our research library, listed in reverse chronological order. Please use the search box to look for research on a specific company or topic, or use the Calendar, Archives, or Sector links at left to browse for research from a specific time period or sector. If you are a Wolfe Trahan client and can not access any of the links in our library, please contact ITSupport@WolfeResearch.com to request our PDF decryption plug-in.
Corporate Actions: Quarterly Guide to Investing in Special Situation Ideas
Investing in corporate action ideas has historically produced alpha and is an investment theme we are closely following in 2012. In this report, we analyze current investment opportunities in spin-offs, special dividends, “stub” equity, NOL companies, post-bankruptcy equity, busted IPO’s, net-net’s, thrift conversions, deep value ideas, dividend initiations, multiple share classes, CEO changes and U.S. M&A activity. Our favorite corporate action ideas are Visteon, Tyco (ADT spin-off), and Liberty Media.
RRTS: LTL Growth Story without Cost Inflation – Upgrading to Outperform.
We upgraded RRTS from Peer Perform to Outperform. We believe RRTS should continue to see strong near-term EPS momentum as it benefits from a combination of 1) LTL tonnage growth above the market, 2) LTL industry pricing discipline, 3) a company-specific shift of purchased transportation towards lower-cost independent contractors (IC’s) versus 3rd party carriers, and 4) strong growth in its TL and TMS segments off a low base including previously completed and expected future acquisitions. More generally, we have grown increasingly comfortable with RRTS’s operating model and management team since we initiated coverage of the stock six months ago. Similar to other asset-light providers in the past, we expect RRTS to earn multiple expansion gradually over time, as management continues to execute and as investors become increasingly comfortable with its unique model.
Inside Freight: LSTR, FDX, CP, U.S. Rail Headcount and Grain, and WAB
LSTR hosted its mid-quarter update call yesterday and affirmed its prior guidance for 2Q EPS on slightly stronger truck volumes but slightly weaker truck yields than we were expecting. FDX announced its third acquisition in the past two months, and we believe yesterday’s deal in Brazil represents the largest of the three so far as we roughly estimate $400M of annual revenue, although FDX did not provide any financial details yet. Meanwhile, CP’s labor strike continues, but back to work legislation is making its way through Parliament and we expect CP to resume operations in Canada by Thursday or Friday. Among other tidbits, our note also shows that headcount growth for CSX, NSC and UNP moderated y/y in April for the third straight month, while the U.S. grain crop is off to a much better start than a year ago. Among other tidbits, our note also shows that headcount growth for CSX, NSC and UNP moderated y/y in April for the third straight month, while the U.S. grain crop is off to a much better start than a year ago.
WBC Initiation: Speak Safety and Carry a Big Backlog
WABCO, the European side of Westinghouse Air Brake which was spun off from American Standard in August 2007, is a major global supplier to truck & bus OEMs focused on high-value safety and fuel efficiency components. With about 60% of revenue in Europe with core customers like Daimler and MAN, an investment in WABCO clearly requires a view on the European truck production cycle, and we believe replacement and a pre-buy ahead of 2014 Euro VI emissions standards are capable of driving upside to consensus EPS. However, we believe the rising adoption rates of WABCO’s components due to both regulations and voluntary measures greatly improve its chances of being a strong multi-year investment regardless of the cycle.
Friday Freight
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Trahan. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
Ed Wolfe Audio Brief: Some Takeaways from the 5th Annual Wolfe Trahan Global Transportation Conference
This week’s Audio Brief consists of 11 slides inspired by different conversations we had with industry insiders, shippers and freight company senior managers at our conference over the past 72 hours. Overall, the tone of demand is muted but relatively consistent. Everything we heard confirms our conviction that investors must be overweight transport stocks in 2012. The transports should continue to grow EPS and cash flow materially above the market as they have done the past two quarters driven by high-end domestic U.S. and U.S. import exposure, consistent domestic freight demand, bottoming Asia to U.S. demand, solid domestic pricing and relatively muted Consensus expectations and valuation. Downwardly cascading diesel prices throughout the quarter (see Slide 11) also should propel EPS for some modes of transports during 2Q.
On Track, Week 20 Ending May 19: Rail Volumes Inflect Back Positive
Total Week 20 rail vols increased 1.0% y/y vs. -0.2% and +1.9% the prior 2 weeks. Excluding continued weak coal, rail vols grew 5.0% y/y, accelerated from +3.6% and +4.8% the last 2 weeks. Total rail vols are now tracking up 0.6% QTD, down modestly from +1.0% in 1Q and compared with our expectations of about +2% for the qtr.
Inside Airlines: Takeaways from our Conference
We hosted four panel discussions involving management, organized labor leadership, and industry experts all from the airline industry. The panelists also participated in well-attended 1×1 meetings throughout the day. Broadly, attendance was solid, and requests for our airline-related 1×1 meetings was up by about 30% on average from last year. This note recaps the five most interesting things we learned from each panel as well as a brief summary of the tone of the discussion.
Inside Freight: Takeaways from Wolfe Trahan’s 5th Annual Global Transportation Conference
At our recent 5th annual Global Transport Conference, we heard 47 companies, 7 shippers, and 26 industry contacts present their thoughts on the current state of the transportation industry. In this note, we highlight our top takeaways and discuss each in greater detail. Overall we think freight feels ok, but generally a little worse than we expected to hear. Domestic vols are generally “boring” but continue to grow modestly (best in SE and worst in MW), while international continues to feel muted.
The AMR Bankruptcy Capacity Monitor
According to published schedule data from OAG filings, AMR’s system-wide capacity (measured by seats, not ASMs) over the next three months (we now look at June-August) is down 2.4% y/y, an incremental 50bp decline from the schedule data from last week. The incremental capacity reductions this week are driven by domestic capacity changes. Domestic capacity is now expected to decline 2.6% y/y (versus -2.0% last week), and Latin capacity is expected to decline 1.0% (versus -0.7% last week). Transatlantic capacity (down 0.8% y/y) and transpacific capacity (down 15.2% y/y) remained unchanged from last week’s read.
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- Ed Wolfe Bi-Weekly Freight Update