Monday, April 9, 2007

Buffett buys Railroads

By now, I am sure everyone is aware of Buffett's 10.9% stake in Burlington Northern Sante Fe Corporation. Like typical Buffett, he is buying railroads just at the exact moment when the industry is predicted weaker growth. Purchased at around $81.40 per share, Berkshire now holds about 39 million shares. Plus Berkshire is supposedly buying shares in other yet to be disclosed railroads.

Here is the link to the Berkshire disclosure filing:

Consider that Burlington hauls enough low sulfur coal to produce about 11% of the country's electricity needs. If you have any long-term favorable outlook for U.S. energy demand, then Burlington makes perfect sense. We know Buffett does, as years ago he publicly stated that Berkshire can be expected to make "substantial" investments in the electric/utility industry.

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