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Allegheny & Western Railway Co. (AWRY) - The perpetual $6 cash machine

11/2/2018

14 Comments

 
This stock is another oddity from the Walker's Manual of unlisted stocks. Allengheny & Western Railway Company (AWRY) was founded in 1898 and has no business operations to speak of. The company simply owns a 62 mile piece of railroad line between Punxsutawney and Butler Junction in Pennsylvania which it leases out for a fixed fee.
Around 1900 AWRY leased the line to Rochester and Pittsburgh Railway for the duration of the firm's corporate existence at an annual rate of 6% on its $100 par value common stock. More recently the lease was acquired by CSX Transportation Inc who also acquired a 50.7% ownership interest in AWRY. Walker's speculates that CSX acquired the controlling interest to prevent shareholders from liquidating the company to realize any underlying value in the 62 miles of rail track.

Now to some numbers;

Market Cap = $3,316,800

Shares Outstanding = 32,000

Price per share = $103.65

Average Vol (30D) = 8

52WK Range = $103.55-$115.00

Dividend = $6 (Per Annum)

Dividend Yield = 5.79%

And now on to the chart


Picture

As you can see, the best time to buy AWRY is when a bear market is under way. Back in the early part of 2001 after the dotcom bubble AWRY fell to $58.50 but was still spitting out $6 a year in dividends. Buying here would give you a 10.25% yield. Fast forward to early 2009 after the great financial crisis of 2008 and AWRY was trading at $66 for a 9.09% yield.

The problem here is liquidity, or rather the lack of it!

The best approach for interested parties would be to wait for a market panic to ensue and then place a GTC (Good till canceled) Limit order and wait to see if it gets filled.  Assuming history repeats, or at least rhymes, and AWRY gets beaten down in the next crisis the possibility exists to capture a safe 9-10% yield and the chance of $30-40 in capital appreciation as the stock price reverts back to around the $100 mark.


At the current price AWRY offers a guranteed 5.79% yield but there is unlikely to be any capital appreciation in the stock. Given the current bull market is at record length and evidently in its final stages a more favourable entry point is likely to materialize in the not too distant future.

For now this is one for the watch list.

Thanks for reading,

David

The author holds no fractional ownership in AWRY at the time of writing.


14 Comments
Joseph t. Kelm
8/13/2019 01:09:20 am

Will traffic pickup with the completion of the mammoth Shell plastic plant north of Pittsburgh?

Reply
David
8/16/2019 07:05:32 pm

Hi Joseph,

I m not sure whether the Shell plastic plant will lead to an increase in traffic on the line.

As I mentioned in my post. The yield is a perpetual 6% on the $100 par common as long as the company exists. Changes in traffic volume would not alter this.

Thanks for taking the time to read and comment on my blog.

Regards,

David

Reply
Joseph t. Kelm link
6/5/2020 10:36:20 pm

Last 154 100 shares never saw a round lot trade in awry. Took me 20 years to build my position. Look at a rail map. You cannot go east west or north south without going over AWRY.

Reply
David
6/6/2020 12:36:18 pm

Hi Joseph,

Wow, that's an impressive level of patience to focus on building a position over 20 years. I completely agree regarding the geographical moat AWRY has, my only concern which I didn't mention in my original post is the fact that the $6 dividend is fixed and is therefore susceptible to the negative effects of inflation. This is more of a long-term concern though given we are in a period of global deflation right now.

Thanks for taking an interest in my blog.

Regards,

David

Reply
James
11/7/2020 10:11:11 am

Why doesn't CSX just outright buy this out?

'As long as the company exists.' Surely a buyout or another existential threat exists to the company?

Reply
JTK link
11/18/2021 03:58:30 pm

Anyone get the annual Report dated 10/15/2021. I got a snafu with Transfer Agent. Looking for Total liabilites and Shareholders Equity Numbers. Thanks.

Reply
Tom
12/23/2021 04:26:34 pm

Greetings, what transfer agent allows for the purchase of AWRY?

Reply
Tina Magill
6/27/2022 04:28:33 pm

Can you tell me who the transfer agent is? We have a client that has 2 shares of stock that we need to change the ownership on and sell. Any help would be appreciated?

Reply
Tom
6/27/2022 04:36:32 pm

The Transfer Agent for AWRY, as well as CSX, is Broadridge. I believe the Broadridge shareholder plan ID may be 4322 for AWRY. I have been searching for a way to purchase shares of AWRY but have not found a way to do so. If anyone knows how I can purchase shares of AWRY please let me know.

Tina Magill
6/27/2022 04:39:26 pm

I had contacted Broadridge and they told me they are not the transfer agent for AWRY? Maybe I need to call and get a different customer service rep? Thanks,

Tom
6/27/2022 04:47:32 pm

Here is the link I found to there shareholder portal. I had emailed them and CSX earlier this spring to inquire on a possible direct stock purchase.

https://investor.broadridge.com/Account/LogOn?ReturnUrl=%2fAccount%2fSignOff%3fticker%3dawry&ticker=awry

David
7/2/2022 02:43:49 pm

According to OTC Markets AWRY's transfer agent is American Stock Transfer & Trust Company

https://www.otcmarkets.com/stock/AWRY/security

Tom
7/2/2022 09:57:03 pm

I have confirmed with Broadridge and CSX that Broadridge is the transfer agent.

It’s link
11/22/2021 05:31:24 pm

Got the annual shareholders equity 2,742,000. 31962 shares outstanding, CSX owns 16159 public 15562. My back of the envelope eval 85.78 public 176.19.

Reply



Leave a Reply.

    David J. Flood

    UK based Investor. I focus
    ​on Net-nets, Pico/Nano caps, AIM/OTC/Dark stocks & Special Situations. Balance sheets & Long-range price charts are my guide. Caveat Emptor!


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