SCCM Enhanced Equity Income Fund Purchased Norfolk Southern (NSC) in Q2

Cullen Capital Management, LLC, operating under the name Schafer Cullen Capital Management, Inc. (SCCM), has released its “SCCM Enhanced Equity Income Fund” second-quarter investor letter. A copy of the letter can be downloaded here. US equities surged in the second quarter, with the S&P 500 gaining 10.9% while the Russell 1000 Value was up 3.8%. The composite underperformed both of its benchmarks in the second quarter, returning -1.2% (net) compared to a 1.9% return by the S&P 500 Buy-Write Index (BXM) and a 3.7% return by the SPDR Bloomberg High Yield Bond ETF (JNK). In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, SCCM Enhanced Equity Income Fund highlighted stocks such as Norfolk Southern Corporation (NYSE:NSC). Norfolk Southern Corporation (NYSE:NSC) engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The one-month return of Norfolk Southern Corporation (NYSE:NSC) was 1.87%, and its shares gained 9.30% of their value over the last 52 weeks. On August 29, 2025, Norfolk Southern Corporation (NYSE:NSC) stock closed at $279.98 per share, with a market capitalization of $62.815 billion.

SCCM Enhanced Equity Income Fund stated the following regarding Norfolk Southern Corporation (NYSE:NSC) in its second quarter 2025 investor letter:

"Norfolk Southern Corporation (NYSE:NSC) – Shares of NSC were purchased in the strategy. With origins dating to 1827, NSC owns and operates a rail network spanning 19,200 route miles and 22 states. From late 2022 through early 2025, the transports industry experienced a freight downturn with a consistent decline in shipment volumes due to destocking and a drop in consumer demand from the pandemic highs. Rail intermodal was hit particularly hard, with 2024 industrywide intermodal volumes down roughly 10% from 2022. However, volumes have begun to recover in 2025, with weekly rail traffic up mid-single digits from a year ago. While concerns remain surrounding the impact of tariffs and global trade fluctuations, NSC should be resilient given its strong presence in the Eastern US connecting 60% of the country’s consumer base and manufacturing base. Importantly, NSC’s operating ratio (OR), a primary measure of rail efficiency, significantly lags that of major peers, with adjusted OR’s in mid- to high 60s versus peers in the low 60s or high 50s percentiles. Increasing efficiency and lowering the OR is a primary goal of Mark George, who took over as CEO in September 2024. Through the implementation of precision scheduled railroading (PSR), Mr. George and his team believe NSC can achieve a low-60s OR in the medium term and a below 60 OR over the longer term. Shares of NSC were purchased at a P/E of 16.8x with a 2.3% dividend yield."

Norfolk Southern Corporation (NYSE:NSC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held Norfolk Southern Corporation (NYSE:NSC) at the end of the second quarter, which was 49 in the previous quarter. While we acknowledge the potential of Norfolk Southern Corporation (NYSE:NSC) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Norfolk Southern Corporation (NYSE:NSC) and shared the list of stocks that Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.