October 13, 2008

Approximately an hour before class, the DOW finished the day up 11%. It seems as if this is the first time all semester that we have started class without devastating financial news. As usual, we began class by discussing current news in relation to the portfolio. We also discussed various options that we should consider. The class came to the consensus that it is not the time to sell any of our positions. We also agreed that there are some bargains that we should consider. Prior to class, we purchased 500 shares of Valero. Last week, the class covered Valero and everyone was very bullish on the company. Mr. Craig Novorr, our guest speaker from last week is also bullish on Valero.

This week the class covered Kansas City Southern (KSU). Overall, we had three buy recommendations and three hold recommendations. KCS is an exciting company and they are set to benefit from the strategic decisions that they have made in the last ten years. For example, they are the exclusive transporter of goods to the US from the Port of Lazaro Cardenas in Mexico. This port is undergoing rapid expansion and is on pace to become the second largest port in North America. The majority of goods that are shipped into this port come from Asia. Also, KCS is benefitting from the migration of automobile manufacturing plants to Mexico, because they will transfer the automobiles to the US. The same goes for other types of manufacturing. KCS is also in the process of developing several intermodal centers.

Mr. Bill Galligan VP of Investor Relations was nice enough to visit class. He began his presentation by complimenting us on our research reports. However, he may have just been trying to soften us up. Either way, we all crossed our fingers that Professor Shenoy was listening. He then spoke about what it was like to work in an investor relations department. He mentioned that he was constantly on the road. That particular career path seems interesting, because of the mix between technical knowledge and correspondence with investors. Mr. Galligan then gave a presentation that he said is similar to what he gives to potential investors. He definitely did a good job selling his company. KCS currently makes up over 6% of the APM portfolio.