Usually I don’t announce my incremental purchases, preferring instead to report in bulk as part of my monthly recap. There are occasions when an exception is warranted so I figured I’d share my thought process with this week’s post – and the subsequent events.
Kansas City Southern is the smallest of the Class I railroads in the US and operates in Mexico through a wholly owned subsidiary. Since the election, it has been beaten down as Mexico is reviewing its’ concession, concerns over NAFTA trade and a weakened peso (impacting earnings).
While reviewing my holdings last weekend, I noticed:
- The price appeared to have hit bottom and began moving higher
- The current price was significantly lower than my $115.07 cost basis
- The ex-dividend date was around the corner (Jun 12th)
- The Mexican peso has risen over 5% (now 6%) against the USD since October
Figuring there was minimal downside left, on Monday (June 5th) I bought enough (at $95.87) to average down my cost basis to $98.69 – though it’s still less than 1% of my portfolio.
Where it gets interesting is:
- June 6th – US and Mexico reach agreement on sugar trade – KSU closes at $96.57
- June 7th – US appears to seek resolution in lumber spat with Canada ($97.46 close)
- June 8th – Guy Adami (CNBC’s Fast Money) announces position ($98.86 close)
- June 9th – Pete Najarian (Fast Money) announces position ($99.59 close)
I certainly did not expect this level of activity but sure am glad I chose to average down when I did. Also not sure what option activity got Fast Money’s attention but suspect we’ll see a little pullback as we go ex-dividend. Still, 3.7% price improvement in a week and now I’m no longer underwater plus the dividend (small though it may be) – have to say it was a good week!
Now to attempt an encore …