Thursday, September 11, 2008

CSX and FDX upside surprises

CSX reports upside numbers and the stock ramps over 5 dollars to 60.85.

FDX announces upside to estimates because of declining fuel costs and the stock adds two and a half bucks to 90.47.

Two hedge funds tried to oust CSX management a few months back, but they were rebuffed in the courtroom. Remember The Children's Investment Fund (CIF) and 3G that tried this stunt?

And at first they didn't even own the shares. They used total return equity swaps from Deutsche Bank!

Now CIF has 40% of their $4+ biilion of money in Union Pacific (UNP 78.64), which was up almost 5 today, 20% in CSX, which was up over 5, and 20% in Mastercard (MA 225.60) which was up 12.28 to 225.60. The also have a piece in CME, which was up almost 10 to 342.

The point is, good news in one stock, causes their other positions to pop, because so many other hedge funds are shorting positions in those funds with concentrated positions. Good news ends the pressure.

Look for Mastercard to continue it's bounce. And look for FCX 68.26 to pop tomorrow. It opened down today, and traded as low as 63.30, closing 5 points off it's low. Atticus Capital owns a big slug of this stock, and $3 billion worth of UNP, BNI, COP, MA and NYX. The same hedge funds that were shorting against TCI's positions, were also gunning for Atticus-they owned the same stocks.

And since I'm speaking of upside surprises, I'd thought I'd mention Research in Motion (RIMM 109.32) up 4.71 today. The CEO was interviewed on CNBC today touting the Blackberry Bold. This has been pressed down by the shortsellers. They are supposed to report earnings on Thursday, September 25. During the interview, they said earnings were going to be reported next Thursday.

Maybe they just inadvertently spoke, but if that would be the case, the September options are incredibly cheap!

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