Aurizon under scrutiny from fund manager

A fair accusation that can be levelled at many company management teams is that they don’t review decisions regarding the expected returns from allocating owners’ capital rigorously enough.

So far, rail freight operator Aurizon (ASX: AZJ) would appear to be one of the few companies to get a tick for focusing on achieving acceptable returns on invested capital to shareholders. But just to remind CEO Lance Hockridge, Philip Green, who represents The Children’s Investment Fund’s 11% shareholding in Aurizon, has been reported in the Australian Financial Review as warning Aurizon “against building a new iron ore network in Western Australia’s Pilbara region, concerned that falling commodity prices will make it impossible to guarantee returns on the huge investment required.”

Aurizon has previously been touted as a buyer of a share in Fortescue Metals’ (ASX: FMG) rail infrastructure assets. However more recently it appears Hockridge’s focus has moved from partnering with Fortescue to instead building his own railway track with the support of smaller Pilbara miners including Brockman Mining Australia (ASX: BRM).

With the cost of a move into the Pilbara rumoured at $10 billion, this is not a move shareholders could afford to get wrong.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now