Berkshire Takes Burlington Northern Private...

[GRG55]

Mere mortals fascinated with railroading buy a train set and put it in their basement. Warren does it a bit differently...

Berkshire buying Burlington Northern railroad

NEW YORK — Warren Buffet's Berkshire Hathaway says it has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.

Berkshire Hathaway Inc. already owns a stake of about 22 percent in Burlington Northern, and says it will pay $100 a share for the rest of the company. That is a 32 percent premium over Burlington's closing price on Monday...

[thisguy]

Re: Berkshire Takes Burlington Northern Private...

Mere mortals fascinated with railroading buy a train set and put it in their basement. Warren does it a bit differently...

Berkshire buying Burlington Northern railroad

NEW YORK — Warren Buffet's Berkshire Hathaway says it has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.

Berkshire Hathaway Inc. already owns a stake of about 22 percent in Burlington Northern, and says it will pay $100 a share for the rest of the company. That is a 32 percent premium over Burlington's closing price on Monday...

smart move... almost no competition in railroads, near oligopoly status and great pricing power.

[GRG55]

Re: Berkshire Takes Burlington Northern Private...

smart move... almost no competition in railroads, near oligopoly status and great pricing power.

The competition for rail container cargo [in the USA] is mostly from long-haul trucking, which is subsidized heavily because it runs on a road system that is funded by the public, unlike the railroads which have to maintain their own track.

Rail clearly has a hammer lock on bulk commodity movements [except Gulf Coast and Mississippi River where barges are cheaper still], but those freight rates are heavily dependent on commodity prices. When prices fall the railroads have to keep cutting their rates in order to help the producers compete and thereby keep their own freight volumes from collapsing.

Mr. Buffett would appear to be making a bet on the cyclicals.

[thisguy]

Re: Berkshire Takes Burlington Northern Private...

The competition for rail container cargo [in the USA] is mostly from long-haul trucking, which is subsidized heavily because it runs on a road system that is funded by the public, unlike the railroads which have to maintain their own track.

Rail clearly has a hammer lock on bulk commodity movements [except Gulf Coast and Mississippi River where barges are cheaper still], but those freight rates are heavily dependent on commodity prices. When prices fall the railroads have to keep cutting their rates in order to help the producers compete and thereby keep their own freight volumes from collapsing.

Mr. Buffett would appear to be making a bet on the cyclicals.

long haul truckers are not exactly thriving
see YRC Worldwide which appears to be on the verge of bankruptcy - one of the, if not the, largest.

I do agree they have some competition there, but I've seen railroads increase rates in the worst recession since the 1930s... that tells me its a pretty wide moat.

[thunderdownunder]

Re: Berkshire Takes Burlington Northern Private...

Perhaps Buffet looked over the peak oil 'cliff' and realized that the ZOOT suit is eventually coming back into fashion ;) Now you might have to read something into that and I can say no more. He is a longterm investor and that is one big move (not to be confused with a gamble).

[metalman]

Re: Berkshire Takes Burlington Northern Private...

it's a trucking short, no?

[thunderdownunder]

Re: Berkshire Takes Burlington Northern Private...

If Its Got Tits or Tyres It' Gunna Give you trouble

USAK -Truckload and intermodal operator USA Truck lost $1.6 million in the third quarter due to low volume and excess capacity in the freight market. Base revenue for the period fell 20.6 percent compared with last year to $82.3 million.

more green whatchamacallits

[Ann]

Re: Berkshire Takes Burlington Northern Private...

If Its Got Tits or Tyres It' Gunna Give you trouble

Unless it's got a dick or tires. Then it's a world of trouble.

[Down Under]

Re: Berkshire Takes Burlington Northern Private...

Unless it's got a dick or tires. Then it's a world of trouble.

Touche

[touchring]

Re: Berkshire Takes Burlington Northern Private...

i'm keen on latching onto this, since warren buffet has boughtt he whole company, what's the best alternative? anyone researching on this care to share?

[Bowenarrow]

Re: Berkshire Takes Burlington Northern Private...

It's the ICE TRUCKERS TV series that is making trucking in general unpopular. I say put some big busty women behind those sixteen wheelers and make the show more exciting, then maybe things will be different.

[thunderdownunder]

Re: Berkshire Takes Burlington Northern Private...

Unless it's got a dick or tires. Then it's a world of trouble.

Then we agree, at least, anything with tyres is a problem;)
even if we cannot agree on the spelling - no doubt a colonial thing for Microsoft "English" edition

[strittmatter]

Re: Berkshire Takes Burlington Northern Private...

It's the ICE TRUCKERS TV series that is making trucking in general unpopular. I say put some big busty women behind those sixteen wheelers and make the show more exciting, then maybe things will be different.

done................

Lisa Kelly cuts pretty figure on 'Ice Road Truckers'



Read more: http://www.nydailynews.com/entertainment/tv/2009/05/29/2009-05-29_blond_trucker_cuts_pretty_figure_on_ice.html#ix zz0VzOkhrFW

[Bowenarrow]

Re: Berkshire Takes Burlington Northern Private...

done................

Lisa Kelly cuts pretty figure on 'Ice Road Truckers'



Read more: http://www.nydailynews.com/entertainment/tv/2009/05/29/2009-05-29_blond_trucker_cuts_pretty_figure_on_ice.html#ix zz0VzOkhrFW

Damn!!!! when is the show on next? ;)

[Shakespear]

Re: Berkshire Takes Burlington Northern Private...

No hard numbers but as a petroleum engineer I would say that Warren see long haul trucking as being too expensive in the near future. ;)