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Strategies & Market Trends : Value Investing

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E_K_S

To: E_K_S who wrote (55252)	4/27/2015 3:46:24 PM
From: geoffrey Wren	1 Recommendation of 78740

TRN sure looks good for the raw numbers, but this lawsuit makes me pass. According to The New York Times, the jury awarded $175 million in the case against TRN. However, that amount will be tripled to $525 million under federal law. Of course there will be appeals that go for years. There are also other penalties that could go up to $184 million. Lawsuit has to do with modification to guardrail design that saved TRN but a little, but supposedly tripled the risk of being killed if the collision occurred at the end of the guardrail. The expense not determined yet is the expense to be incurred if TRN is forced to modify all the guardrails with this defect. There are already class-action suits going. The 10K indicates exposure cannot be quantified, but may be substantial. Multi-year distraction, attorney fees, potentially large judgments against this company with a market cap of $4 billion. As to insurance coverage, I tend to doubt insurance would cover these expenses, although maybe it would. For investment purposes, I would assume not. Better to be pleasantly surprised than unpleasantly surprised when that decision is made.

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