Trinity Industries (TRN): Are they still running down the track?

9 minutes



Trinity Industries (TRN) is a leading company that specializes in industrial products and services. They offer railcars, railcar parts, and leasing, management and maintenance products. They also offer additional services such as barges, storage and distribution containers as well as highway products and wind towers.

The company which is based in Dallas, Texas was founded in 1933 and employs 22,030 people and has annual sales of $6,392.7 billion as of 2015. Sales have tripled in the last five years from $1.9 billion to the current $6.4 billion.

In the last five years, TRN stock has seen a 74% increase in the current price of $23.49.

The last decade has seen a steady increase in earnings growth as well as dividend increases as well. TRN has paid dividends for the last 209 quarters and counting. While not in the same class as a Dividend Aristocrat, the fact that they have paid a dividend since 1964 lets me know that their shareholders are important to them.

TRN is not the highest-yielding stock. Its dividend currently is a pretty paltry 1.86% right now. But what it lacks in yield, it makes up for with consistency.

Business Overview

Trinity Industries breaks up their business into five different groups. We will discuss them in turn.

Rail Group

The Rail Group which is responsible for 45% of the revenue generated by TRN is a leading manufacturer of railcars, railcar axles, and railcar coupling devices.

They also produce autorack cars, boxcars, covered hopper cars, and tank cars among others. Currently, they compete against five other major railcar manufacturers in North America.

In 2015 TRN shipped 34,295 railcars which were 41% of all railcars shipped in North America.

In addition to the railcars, the Rail Group also manufactures railcar parts and components used in manufacturing or repairing railcars including couplers, axles, and other equipment. They also have repair services available at multiple facilities in the US.

They have set up the manufacturing to be able to change to demands of the business and be able to provide any type of railcar that is needed. Continue reading “Trinity Industries (TRN): Are they still running down the track?”

Podcasts That I Listen Too and So Should You

6 minutes

This list is by no means comprehensive but they are the most influential to me and I think bring great value to anyone that is looking to learn more about investing. They are in no particular order.

THE INVESTORS PODCAST        The Investing Podcast

Easily one of my favorite podcasts from the very beginning. This is run by Preston Pysh and Stig Brodersen. They both have great insights into investing and they come at it from a value perspective, which I really enjoy.

The format is structured around book reviews. Every week they will review a book that has been written by or about a millionaire. The thesis is that they study billionaires and how they accumulated their wealth. Not all of the books are related specifically to investing per se.

They also throw in some interviews with some great authors, hedge fund managers, and investing professionals. The also include their mastermind sessions with other very smart people in which they will discuss all kinds of subjects ranging from technical aspects to macroeconomics and everything in between.

Needless to say, each interview is very well done with some fantastic questions asked. I also really enjoy their discussions about macroeconomics and how it affects the market.

Their investing idols would be Warren Buffet, Charlie Munger, and Ray Dalio. All three of these gentleman are from the value investing world but with different slants to how they think. Preston and Stig do a great job of breaking down some of the different aspects of their philosophies and make it very understandable to even me.

Probably my favorite thing about his podcast is the energy and passion that they both have about value investing. And how much they want to help educate the public and encourage everyone to learn more about how to grow their wealth. They present all of their material in a way that can be easily understood, even to someone who would be new to this.

They post one episode a week on Sundays and they typically range to about an hour an episode. They also have a great website with some additional materials on it. In particular would be the forum that they run and some awesome educational videos they created. The videos are a series explaining the basics of investing to some very advanced topics. Top notch stuff that I aspire to be as good as.

THE MEB FABER SHOW        Meb Faber Research – Stock Market and Investing Blog

Another highly anticipated podcast for me every week is the Meb Faber show. Meb is a hedge fund manager for Cambria and he is a very educated and spoken host. I really enjoy his show for the education that he presents.

He has two shows a week and each is about an hour long. He has links to all the items that he discusses on his website. He has links to some awesome material from different white papers he has written to books of his as well as some other great investors.

Continue reading “Podcasts That I Listen Too and So Should You”

Blogs I Follow

6 minutes

Here is a list of the most influential blogs that I read. They are a great mix of investing insights and practical tips that you can apply easily.

Teaching yourself about finance and investing is like learning a new language. The only way to learn it is to immerse yourself in it. This list of blogs has been the most influential for me. I learn so much from them that I can apply on a daily basis. I hope you enjoy them as much as I do.

Investing for Beginners 101        Investing for Beginners 101

One of my favorite blogs. This is written by Andrew Sather. He is a self-taught investor that started just recently but he has a great way of explaining things so you can easily understand what he is trying to convey.

Andrew is from the value investing school and is a great admirer of Warren Buffet, Benjamin Graham among others. Andrew has written some really great articles and he has an awesome free ebook about how to buy your first stock and how to evaluate stocks. It is a very easy book to read and he has some great examples to show you how to do it.

The Value Trap is another book he has written in this he discusses some of the biggest bankruptcies and what lead to their demise. It gives a great look at what financial indicators were present that directly lead to the companies going bankrupt. The book has great charts and lays out the indicators to look for when you are valuing a company so you can avoid these value traps in your own investing. Definitely worth every penny

He was also one of the co-founders of one of my favorite podcasts, The Money Tree Podcast. Andrew was the value investor representative on the show and I really enjoyed his insights.

I really enjoy reading Andrew’s blogs every week and he is one the one that gave me the idea to start my own blog. I took inspiration from his story and I could relate to where he was coming from. I like his views on investing and I agree with with the way that he presents his material.

I hope you enjoy his work as much as I do.

Old School Value

Another favorite that is run by Jae Jun. Like Andrew, he is a self-taught investor as well. Jae also is from the value investing camp. His website has so many great tools, articles and a terrific screening tool that he created.

Jae comes at things from a much more technical aspect than some of the blogs that I read but I really enjoy his breakdown of how he uses these tools to value a company. He has a great way of explaining some of the more technical math problems and making them easier to understand. He has some great spreadsheets that you can utilize to follow the examples he writes about.

Continue reading “Blogs I Follow”

Value Investing Advice from the Dhando Investor

12 minutes

51gn-ygw5ol-_sx330_bo1204203200_The Dhando Investor, the low-risk value method to high returns is a wonderful book written by hedge fund manager Monish Pabrai. In it, he gives a comprehensive value investing framework for the individual investor.

The book is written in a straightforward style that is easy to read and comprehend. The Dhando Investor lays out the amazingly powerful value investing framework. Written with the intelligent individual investor in mind.

The Dhando method expands on the value investing principles expounded by Benjamin Graham, Warren Buffett, and Charlie Munger. In this book, we will come across phrases like “Heads I Win! Tails, I don’t lose much”, “Few bets, Big bets, Infrequent bet.”

Other concepts discussed are Abhimanyu’s dilemma, a detailed breakdown of the Kelly formula to invest in undervalued stocks.

So who is Monish Pabrai? I can hear you asking who is this guy and why are we talking about his book?

Let’s dig in a little and learn more about Monish.

Monish was born in 1964 in Mumbai, India and he moved to the US in 1983 to study at Clemson University. After graduation, he worked in the tech world until branching out on his own.

He started his own tech company with $30,000 from his 401k and $70,000 in credit card debt. In 2000 he sold the company for $20 million.

In 1999 he started Pabrai Investment Funds, that he still runs today. Since the fund’s inception, he has generated net returns of 517% versus the 43% return of the S&P 500 for the same time period. We are talking 16 years that he has made these returns.

His focus is long-only equities that are deeply distressed. He looks for two to three ideas a year, which he feels is enough. His portfolio is highly concentrated in that he generally only holds 10-20 stocks at one time. Currently, he has seven positions.

Buying and holding are only part of his strategy, he also looks very closely at his mistakes as well. Investing is a field where mistakes can be very costly and they must be looked into. He is unusual in that he doesn’t gloss over mistakes but rather spends time breaking down what happened so he can learn from the mistake. So he doesn’t repeat it in the future.

He uses a checklist of what not to do in the markets. Pabrai built this list by analyzing investors that he admires and deconstructing their mistakes. As a result, he ended up with hundreds of checkboxes on his investing checklist. This is not his exact checklist but rather an outline of his checklist and how he things about constructing his. He feels that each individual investor should come up with their own checklist as they learn more about investing.

Monish Pabrai’s primary source of investment ideas come from the 13F SEC filings from other value investment managers that he admires. 13F SEC filings are a quarterly filing required of all institutional investment managers with over $100 million in assets. In this filing, they will list all the current holdings for each fund. It will also list the prices purchased or sold as well.

This is a great source of investing ideas and is a whole investment strategy in and of itself. We will dig into this topic in a future post.

Continue reading “Value Investing Advice from the Dhando Investor”