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Discussion Starter #1
I'm wondering if the ownership of CN Rail and BNSF (US) create an anti-competitive situation that we should be concerned about.

CN Rail's shareholder info shows 14.29% + 2.41% = 16.7% owned by Bill Gates through a couple entities he controls. This is a significant stake by a single shareholder. Given that many other shareholders are passive funds, this could mean that Bill Gates's influence is even stronger than just the 16.7% would suggest.

BNSF, the largest freight railway in North America, is fully owned by Berkshire Hathaway.

My concern is that Bill Gates is heavily involved with Berkshire Hathaway. Until recently, he was on the BRK board for 16 years, which is bad enough on its own! He is a longtime friend of Warren Buffett and I would imagine he would still have Buffett's ear. Him, or his estate, when Buffett dies.

Does anyone think this could result in a situation that hurts the motivation of both companies to compete with each other? Isn't there a conflict of interest?

There is research (linked here) that shows that companies don't compete very well when they have common shareholders.
 

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Some worry that this is happening with index funds owning large swaths of the market, blunting the incentive to compete vigorously when firms are all owned by the same funds.
 

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Some worry that this is happening with index funds owning large swaths of the market, blunting the incentive to compete vigorously when firms are all owned by the same funds.
Such as Blackrock itself.... I surely cannot formulate a conspiracy between CN (Gates) and BSNF (Buffett). I think if James took the time to actually look at railway network maps, he'd see BSNF doesn't operate in the same territory as CN. There are interconnections in the midwest of course, but that applies to all the railroads.
 

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Discussion Starter #4
Such as Blackrock itself.... I surely cannot formulate a conspiracy between CN (Gates) and BSNF (Buffett). I think if James took the time to actually look at railway network maps, he'd see BSNF doesn't operate in the same territory as CN. There are interconnections in the midwest of course, but that applies to all the railroads.
Thanks, I didn't know how the networks overlap.

I wouldn't say it's a conspiracy theory to worry about a single wealthy industrialist who has an outlandishly large stake in our national railway. He's not a big institutional fund with millions of unitholders; he is Bill Gates, one man.

By the way, CN Rail and BNSF tried to merge at some point in the past. So they clearly have some kind of overlapping business interests. I'm not convinced that they have nothing to do with one another.
 

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It is a virtual guarantee that none of the big 5-6 Class A railroads will ever be allowed to merge. There are certainly ones that make could sense. CNR and BNSF. CP tried to latch it up with CSX and NS. Highly unlikely. The railroads are irreplaceable assets that are already virtual money printing monopoly machines; they only compete really against economic conditions. Imagine trying to build more railroads today.

Bill Gates, I believe, has been a shareholder in CNR since shortly after it went public in the 1990's, this isn't a new position by any means.

I think it's worth pointing out that railroads are also extremely important for national security and are closely regulated by both US and Cdn governments. No one would realistically be able to do anything to them under the radar.
 

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I agree with Doctrine that cross-border mergers like CN and BSNF would not be allowed for national interest purposes. To respond to James, the only reason for them to 'merge' would be to provide seamless rail transportation through the 'Chicago' hub. All big rail lines tend to merge at that hub. Nothing new there. But there is not reduction of competition if CN and BSNF got together. We know railroads already have equipment sharing agreements. I have seen BSNF locomotives in Canada for example.
 

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The railroads are irreplaceable assets that are already virtual money printing monopoly machines; they only compete really against economic conditions. Imagine trying to build more railroads today.

I think it's worth pointing out that railroads are also extremely important for national security and are closely regulated by both US and Cdn governments. No one would realistically be able to do anything to them under the radar.
Musk has visions of cargo pods in tunnels and hyperloops that makes rail look last century. Tunnels and hyperloops are already being built but yea Canada would be the last viable market to modernize and we'll see it coming long before. Just look at all the train derailments.. business is very slack and ripe for disruption

*holds CNR
 

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Discussion Starter #10
Not really, the dividend is pretty meaningless. In fact it's a bit of a nuisance, because the large dividend is kind of like I'm being forced to sell shares every time it happens. Dividends are equivalent to selling shares.

So instead, I have to make sure I reinvest that cash back into the shares, creating the equivalent of a stock that doesn't pay dividends.

The dividend does not increase the stock's return.
 

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Musk has visions of cargo pods in tunnels and hyperloops that makes rail look last century. Tunnels and hyperloops are already being built but yea Canada would be the last viable market to modernize and we'll see it coming long before. Just look at all the train derailments.. business is very slack and ripe for disruption

*holds CNR
If road transport can be electrified and automated (Tesla semi with self-driving), long-haul trucking might take a bite out of rail for higher value or perishable freight.
 

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Musk has visions of cargo pods in tunnels and hyperloops that makes rail look last century. Tunnels and hyperloops are already being built but yea Canada would be the last viable market to modernize and we'll see it coming long before. Just look at all the train derailments.. business is very slack and ripe for disruption

*holds CNR
No wonder Tesla is $1700 a share. They already replaced rails.
 

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No wonder Tesla is $1700 a share. They already replaced rails.
No. Tesla is just 1 of his dozen companies. Hyperloop already has contracts in other countries for mass transport of people. Cargo is the natural progression in conjunction with autonomous electric semi-trucks.

CN has so little competition they can afford to let their 19 century rails fail apart and their oil tankers spill all over Canada. It's not even a question if there will be major CN derailments this year. It is how much damage will be done
 

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Is CNR's accident rate increasing or decreasing? And if that traffic moved to trucks, would it be safer or less safe? My quick look at a) suggests decreasing over the years, by quite a bit, and b) suggests it would be significantly less safe, especially given how many trucks would be necessary. An automated trucking industry with 95% less accidents may getting there. But we are a long, long, long way from that. Trucking accident rates by themselves have already fallen quite dramatically in the last few decades, so you may not see the type of gains you might expect by automation.
 
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