Core Insights - Oakmark Fund underperformed the S&P 500 Index in Q3 2025 but has outperformed since inception [1] - Financials and energy sectors were the largest contributors to performance, while health care and consumer staples detracted [1] Company Analysis: Union Pacific Corporation (NYSE:UNP) - Union Pacific Corporation is the largest and most profitable Class I railroad in the U.S., with a market capitalization of $137.332 billion [2][3] - The stock had a one-month return of 7.74% but lost 4.44% over the last 52 weeks, closing at $231.54 on October 9, 2025 [2] - The company benefits from strong pricing power and minimal risk of technological disruption, supported by irreplaceable infrastructure [3] - Leadership under CEO Jim Vena has driven significant cultural and operational improvements, although the stock has underperformed due to macro headwinds and merger uncertainties [3] - The stock is considered undervalued, with potential upside if the proposed merger with Norfolk Southern is approved [3] Hedge Fund Interest - Union Pacific Corporation was held by 89 hedge fund portfolios at the end of Q2 2025, an increase from 85 in the previous quarter [4] - Despite its potential, certain AI stocks are viewed as having greater upside potential and less downside risk compared to Union Pacific Corporation [4]

Core Insights - Norfolk Southern Corporation (NSC) has a market cap of $66.6 billion and operates one of the largest freight rail networks in the eastern United States, providing transportation for various commodities [1] Financial Performance - The company is expected to release its fiscal Q3 2025 results on October 23, with analysts projecting an adjusted EPS of $3.18, a 2.2% decline from $3.25 in the same quarter last year [2] - For fiscal 2025, adjusted EPS is forecasted to be $12.46, reflecting a 5.2% increase from $11.85 in fiscal 2024, with further growth projected to $13.97 in fiscal 2026, a 12.1% year-over-year increase [3] Stock Performance - NSC stock has increased nearly 22% over the past 52 weeks, outperforming the S&P 500 Index's 17.4% return and the Industrial Select Sector SPDR Fund's 14.8% gain during the same period [4] Market Sentiment - Despite a better-than-expected Q2 2025 adjusted EPS of $3.29, shares fell over 3% due to revenue of $3.11 billion missing estimates and concerns over rising operating expenses [5] - Analysts maintain a cautiously optimistic view on NSC stock, with a "Moderate Buy" rating from 21 analysts, including six "Strong Buy" and 15 "Hold" ratings, indicating a less bullish sentiment compared to three months ago [6] - The average analyst price target for Norfolk Southern is $310, suggesting a potential upside of 4.5% from current levels [6]

Core Insights - Warren Buffett is set to retire as CEO of Berkshire Hathaway, leaving behind a legacy as one of the greatest investors of modern times after over six decades at the company's helm [1] - Investors closely monitor Berkshire's quarterly stock holdings, particularly interested in the $1 trillion stock that Buffett has invested over $78 billion in since 2018 [2] - Berkshire Hathaway became one of only ten companies to reach a $1 trillion market cap, achieving this milestone in August, and is notable for not being a tech or AI-focused company [3][4] Company Overview - Berkshire Hathaway operates multiple major business divisions, including property and casualty insurance, with GEICO as a subsidiary, as well as owning the Burlington Northern Santa Fe Railroad and several large energy companies [4] - The company has a stock portfolio exceeding $300 billion, investing in long-term positions in companies like Coca-Cola, American Express, Bank of America, and Apple, which have generated significant profits for shareholders [5] - Since 2018, Berkshire has repurchased over $78 billion of its own stock, reducing the outstanding share count and increasing ownership stakes for existing investors [6]

Core Insights - CN set a new record for grain movement in September, transporting over 2.91 million metric tonnes of grain from Western Canada, an increase of 80,000 metric tonnes from the previous record for the month [1] - The company is focused on maintaining a steady flow of grain through the supply chain as the harvest season nears its end, emphasizing safety and efficiency in delivering goods to market [2] Company Operations - CN has published its 2025-2026 Winter Plan, outlining proactive solutions to ensure smooth operations across its network during the winter months [3] - The company plays a crucial role in the economy by transporting over 300 million tons of natural resources, manufactured products, and finished goods across North America annually, utilizing a nearly 20,000-mile rail network [4]

Core Insights - High-rolling investors are bullish on Union Pacific (NYSE:UNP), indicating potential privileged information behind significant trading activity [1] - The sentiment among major traders is mixed, with 50% bullish and 12% bearish positions noted [2] - Significant investors are targeting a price range of $220.0 to $260.0 for Union Pacific over the next three months [3] Options Activity - Recent options activity includes 8 trades, with 7 calls totaling $572,065 and 1 put amounting to $135,750 [2] - Noteworthy options trades include a bullish call sweep with a strike price of $220.00 and a total trade price of $227,800 [9] - The volume and open interest trends for options within the $220.0 to $260.0 strike price range are crucial for assessing liquidity and interest levels [4] Company Overview - Union Pacific, based in Omaha, Nebraska, is the largest public railroad in North America, operating over 30,000 miles of track [10] - The company generated $24 billion in revenue in 2024, primarily from transporting coal, industrial products, intermodal containers, agricultural goods, chemicals, fertilizers, and automotive goods [10] - Union Pacific owns approximately 25% of the Mexican railroad Ferromex, contributing about 10% of its revenue from freight to and from Mexico [10] Analyst Ratings - Recent analyst ratings for Union Pacific show a consensus target price of $250.75, with various analysts maintaining or adjusting their ratings [11][12] - Analysts from Susquehanna and Citigroup have set price targets of $272 and $251, respectively, while UBS and Loop Capital have targets of $253 and $227 [12] Current Market Status - Union Pacific is currently trading at $237.5, with a volume of 857,492 and a slight increase of 0.3% [14] - The stock may be overbought according to RSI readings, and an earnings release is anticipated in 17 days [14]

Core Insights - ClearBridge Investments reported strong equity performance in Q3 2025, with the S&P 500 Index rising 8.1% and the Nasdaq Composite increasing 11.2% to record highs, driven by positive tariff results, anticipated interest rate cuts, and robust corporate earnings, especially in technology [1] - The ClearBridge Large Cap Growth Strategy underperformed the benchmark Russell 1000 Growth Index, which rose 10.5% for the quarter, due to underexposure to perceived AI winners and holding stocks considered AI losers [1] Company-Specific Insights - Union Pacific Corporation (NYSE:UNP) had a one-month return of 7.48% but saw a 0.86% decline in value over the past 52 weeks, closing at $236.80 per share with a market capitalization of $140.452 billion on October 3, 2025 [2] - The merger between Union Pacific and Norfolk Southern is expected to create an overhang on Union Pacific, limiting its upside potential, especially in a weak freight environment that has been in a multi-year recession [3] - Union Pacific Corporation is not among the 30 most popular stocks among hedge funds, with 89 hedge fund portfolios holding the stock at the end of Q2 2025, up from 85 in the previous quarter [4]

Core Viewpoint - BNSF Railway opposes the proposed $85 billion merger between Union Pacific and Norfolk Southern, urging customers to voice their concerns to the Surface Transportation Board (STB) [1][2]. Group 1: Merger Opposition - BNSF asserts that no customers are requesting the merger, which it claims is driven by Wall Street for shareholder payouts [2]. - The company believes that the merger is unnecessary and that it can provide immediate benefits to customers while maintaining competition [2]. Group 2: Market Impact - A merger would result in Union Pacific and Norfolk Southern controlling 45% of existing freight, moving 46% of containers, and holding a 43% market share of total carload volumes [2]. - The combined companies would dominate over 50% market share in categories such as chemicals, metals, and lumber [2]. Group 3: Customer Effects - Carload and agricultural product customers would be significantly affected, facing reduced shipping options to the eastern U.S. and potentially higher rates for traffic currently interchanged with Norfolk Southern [3]. - Post-merger, some customers may still have two rail options, but many will be left with no alternative routes, creating a new generation of captive shippers [4]. Group 4: Competitive Landscape - Union Pacific's CEO defends the merger, citing previous tie-ups by companies like CSX and Canadian National Railway to enhance efficiency [4]. - Despite pressure from an activist investor, BNSF has no interest in merging with CSX as a counter to the Union Pacific-Norfolk Southern deal [5].

Group 1: Canadian National Railway (CNI) - Canadian National Railway is a major player in the economy, transporting over 300 million tons of goods across North America annually with nearly 20,000 miles of rail lines [4] - The company's economic moat is characterized by its extensive and hard-to-replicate railroad infrastructure, as well as its primary role as the main rail operator for the Port of Prince Rupert, enhancing its intermodal growth potential [5] - CNI has improved its margin performance in recent years, with a current dividend yield of 2.7% and a history of consistent dividend increases [7] Group 2: PepsiCo (PEP) - PepsiCo is a global leader in the snacks and beverages market, with well-known brands such as Pepsi, Gatorade, Lay's, Cheetos, and Doritos, dominating the savory snacks market and ranking as the second-largest beverage provider [8] - The company has a diverse portfolio that contributes to its strong market position and financial performance [9]

Group 1: Workforce and Hiring - The railroad industry is experiencing a worker shortage, particularly in critical roles such as train drivers, but Union Pacific reports no significant issues attracting talent due to competitive compensation and job appeal [2][4][5] - Union Pacific employs a diverse range of professionals, including technicians and legal staff, and has a notable percentage of veterans among its workforce, indicating a broad hiring strategy [4][5] - Average compensation for jobs at Union Pacific, including benefits, ranges from $140,000 to $150,000 per year, which is competitive compared to other industries [7] Group 2: Economic Outlook - The demand for products transported by Union Pacific remains strong, with the company moving approximately 500 different products that consumers use daily, indicating robust consumer spending [13] - Despite some sectors, like housing, showing signs of slowdown, Union Pacific's overall business volume has increased year-over-year, suggesting resilience in the economy [14] - The merger with North Fork Southern, valued at $85 billion, aims to create the first transcontinental railroad in the U.S., which is expected to enhance competitiveness and efficiency in the transportation sector [15][16][18] Group 3: Innovation and Productivity - The company emphasizes the importance of leveraging technology to maintain productivity in the face of workforce challenges, suggesting that innovation will continue to drive growth [8] - The potential merger is framed as a significant step towards creating a seamless railway transportation system in the U.S., which is currently lacking compared to other industrial nations [17]

Core Insights - Canadian National Railway (CNI) is a major player in the North American rail industry, known for its operational efficiency and defensive investment profile [1] - Scotiabank maintains an "Outperform" rating for CNI, adjusting its price target from C$153 to C$150, reflecting a cautious yet optimistic outlook [2][6] - CNI is currently trading near its 52-week low, presenting a potential buying opportunity for long-term investors [3][6] Financial Performance - CNI's stock is priced at $96.15, showing a 1.78% increase or $1.68, with fluctuations between $94.36 and $96.18 on the day [3] - Over the past year, the stock reached a high of $116.79 and a low of $91.07 [3] - The company has strong operational efficiency and robust free cash flow, supporting consistent dividends and share buybacks, making it attractive for investors seeking stable returns [4][6] Market Position - CNI has a market capitalization of approximately $60 billion and a trading volume of 807,579 shares on the NYSE, indicating its significance in the market [5] - The forward price-to-earnings ratio for CNI is below historical averages, suggesting potential value for investors [5]