In short: A tracker-sized position in the rail merger. "We own a little bit of this NSC/UNP as a tracker, but not a lot." Last week he called NSC/UNP the widest large-cap spread on the screen; this week it is confirmed as a small monitoring stake rather than a conviction position — consistent with the 2027 regulatory calendar that stretches its annualised return.
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In short: The target side of the same STB schedule — a revised merger application with final briefs not due until May 28th, 2027. The deal is alive and proceeding, but on a regulatory calendar that stretches the spread's annualised return well out.
Norfolk Southern is the eastern railroad being acquired in the Union Pacific merger, so it is the side an arbitrageur would actually own — buying the target below the agreed price and waiting for approval.
The same Surface Transportation Board schedule applies: a revised merger application, with final briefs due May 28, 2027, and a decision after that. The deal is proceeding rather than stalling, but the money is now tied up for a long time, which is the whole of the observation.
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In short: The second live arb: "we've also been long NSC UNP, which is a 12 and 1/2% spread on the merger arb side" — the transcontinental rail combination, held alongside WBD as the low-beta ballast in the book.
The same merger-arb structure applied to railroads: Union Pacific is combining with Norfolk Southern, and the gap between today's price and the deal terms is about 12.5%. A wider spread than usual signals the market doubts approval — which is the bet he is taking the other side of.
5:52We've also been long NSC UNP, which is a 12 and 1/2% spread on the merger arb side. And then on the earnings front there've been a number of companies reporting that we bought for a trade, right? So, in the big AI sell-off, we saw GPU lease rates go up and you can track them on Bloomberg for the H100s, which is one of the things that Jensen has been touting, and in the B300s and as a result we bought Nebius and CoreWeave.
In short: Context only — the other half of the Union Pacific merger CN traded its opposition away on. No stance offered.
38:08I would expect that we'll go through all-time highs here. And I think that there's still some multiple expansion, but we're kind of getting into the later innings of that relative trade. — Interesting. You did mention the Union Pacific / Norfolk Southern merger which CN Rail was opposed to, except now they were playing chess with that and now, in exchange for not being opposed to it anymore, they now get market access to some of UNP's rail network, right? — So exactly, so that
In short: Named among the widest, most attractive spreads in the market (with the Union Pacific rail merger and WBD).
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