CSX Corporation
CSX
position
short
Rational Asset Management
Thesis
In May 2008, we were short CSX because the market was implying that the ROIC would be 15% in perpetuity, which we believed was unrealistic given the economic conditions and competition from trucking.
Did it work?
worked
confidence: high
The thesis to short CSX was based on an unrealistic market expectation of a 15% ROIC in perpetuity, which has proven to be correct given the significant decline in stock price of -600.8%. The long time elapsed since the pitch has allowed for the thesis to fully play out, confirming the concerns about economic conditions and competition. The dramatic price performance indicates that the market has adjusted its expectations significantly in line with the thesis.
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