Skylands Capital’s Top Transportation Stocks for Q3

#3. AMERCO (NASDAQ:UHAL)

– Shares Owned by Skylands Capital LLC (as of June 30): 35,415

– Value of Skylands Capital LLC’s Holding (as of June 30): $13.27 Million

The hedge fund firm run by Charles Paquelet also reduced its exposure to AMERCO (NASDAQ:UHAL) during the three-month period ending June 30, by 15%. The 35,415-share stake was valued at $13.27 million at the end of June. The parent company of U-Haul International, North America’s largest “do-it-yourself” moving and storage operator, has seen the value of its stock gain 15% in the past year. The company’s self-moving equipment rental revenue increased by $151.6 million during its fiscal year 2016 that ended March 31, to $2.30 billion, as AMERCO continues to focus on expanding its retail distribution system and growing its rental equipment fleet. AMERCO shares are currently changing hands at around 13.2-times expected earnings, meaningfully below the forward P/E multiple of 18.4 for the S&P 500 Index. Cliff Asness’ AQR Capital Management had 122,121 shares of AMERCO (NASDAQ:UHAL) among its holdings at the end of the first quarter.

#2. Norfolk Southern Corp. (NYSE:NSC)

– Shares Owned by Skylands Capital LLC (as of June 30): 176,200

– Value of Skylands Capital LLC’s Holding (as of June 30): $15.00 Million

Skylands Capital owned 176,200 shares of Norfolk Southern Corp. (NYSE:NSC) at the end of the June quarter, 16,350 shares more than it did at the end of the March quarter. The upped stake was worth $15.00 million at the end of the second quarter and made up 2.5% of the value of the hedge fund’s equity portfolio. Earlier this year, Canadian Pacific Railway Limited (USA) (NYSE:CP), Canada’s second-largest railroad, abandoned efforts to buy Norfolk Southern amid strong opposition from Norfolk executives, shippers, U.S. politicians, and rival railroad companies. Norfolk Southern recorded first quarter railway operating revenue of $2.4 billion, down by 6% year-over-year due to reduced fuel surcharge revenue and volume declines driven by lower coal volumes. The shares of the railroad are up by 11% since the start of 2016. Dmitry Balyasny’s Balyasny Asset Management added a 1.55 million-share position in Norfolk Southern Corp. (NYSE:NSC) to its portfolio during the March quarter.

#1. Union Pacific Corporation (NYSE:UNP)

– Shares Owned by Skylands Capital LLC (as of June 30): 577,900

– Value of Skylands Capital LLC’s Holding (as of June 30): $50.42 Million

Union Pacific Corporation (NYSE:UNP) was the second-largest holding in Skylands Capital’s portfolio at the end of June and its largest holding in the transportation sector, accounting for 8.2% of the value of its equity portfolio. The Milwaukee-based long/short equity investment firm cut its stake in Union Pacific by 12% during the second quarter to 577,900 shares, which were valued at $50.42 million at the end of the quarter. The No. 1 U.S. railroad has seen its market capitalization gain 18% so far in 2016. Just recently, United Pacific said its second quarter earnings fell by 19% year-over-year to $979 million, as freight demand remained soft, which also pushed the company’s top-line down by 12% year-over-year to $4.77 billion. Just recently, analysts at Deutsche Bank downgraded the railroad operator to ‘Hold’ from ‘Buy’ and maintained their price target of $94 on it, saying that railroads are not likely to experience short-term volume growth due to the strength of the U.S. dollar, high inventory, and increased uncertainty in the global economy. Ken Fisher’s Fisher Asset Management owns 126,604 shares of Union Pacific Corporation (NYSE:UNP) as of June 30.

Disclosure: None