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MTR (and KCRC) – a possible hybrid model for railway companies that also exposes it to more risk

|Includes: Burlington Northern Santa Fe Corp. (BNI), BRK.B, CSX, EOP, EQR, NSC, SPG, UNP, VNO

Hong Kong’s largest railway and subway company, Mass Transit Railway (NYSE:MTR) and its subsidiary Kowloon Canton Railway Company (KCRC) are some of the tightest credit default swap names in the corporate market. MTR and KCRC are also one of Hong Kong’s largest property owners and managers. Both trade fairly close to each other at around 30 basis points and both have seen a resurgence in interest and confidence having declined about 15 basis points, or 33%, from their mid-February highs. When investors think MTR, however, they may not always realize that the company is becoming as much of a real-estate and property driven business as it is a traditional public transportation concern. Unlike some of their American-based competitors like Berkshire Hathaway's Burlington Northern or CSX which are mostly pure-play railway companies, MTR is really transforming its business lines as the latest financial reports exemplified

Disclosure: long all stocks