Big news this morning rail fans! Warren Buffett and Berkshire Hathaway are purchasing all outstanding stock of BNSF Railway and taking the railroad private. BNSF will become a wholly owned subsidiary of Berkshire Hathaway.

For more details, go to the BNSF website at www.bnsf.com.

Remember playing Monopoly, and you tried to buy the B&O, Reading Railroad, and
so on? Well, good old Warren Buffett seems to have enough money to play it for
real, LOL! He just bought BNSF. Several things strike me as ironic. First, he
also owns some UP. Second, and perhaps most ironic of all, the owner of BNSF
lives in Omaha! Is this too much or what? Wonder if Buffett will now buy some
big old locomotives and park them on the bluff overlooking downtown Omaha?

Railroad stocks were popular last summer as the talking heads were saying the
economy was slowly improving and railroads would be the first in line to take
advantage of that. Then, over the past couple of months we started hearing that
because factories weren't running as much and because the weather was mild power
plants didn't need as much coal. They had huge stockpiles on hand. Coal is
about 40% of what some railroads haul. Uh oh! Container traffic is still down,
about 12% from a year ago, and it's not expected to rebound for maybe a year.
Uh oh! And shipments of autos is still way down. More bad news for railroad
earnings! Grain traffic has been down because of wet weather. No wonders the
stocks don't look so good for earnings for maybe another year. Heeding the
advice of the ancients, "Buy low, Sell high!", Buffett has bought! The old UP
headquarters, across the street from the new building in downtown Omaha, was
still sitting vacant, for sale last time I looked. I think it would be
absolutely cool if Buffett bought that too and moved into it, and hung a big
sign over the door facing UP that said, "BNSF." LOL, I would just love that!


Kent in SD

When the Q3 earnings reports were issued about two weeks ago, all of the railroad stocks took a hammering. I think you are dead on with your comment about Buffett buying low to sell high. The man has an excellent track record for seeing sunshine when everyone else sees clouds.

If you have a few bucks to play with, this would probably also be a good day to buy into another of the Class 1's. I suspect this deal will drag a number of the other railroad stocks higher.

No doubt Mr. Buffett knows how to make money. I did hear on the business news this morning that Mr. Buffett stated "That transporting freight from point A to point B by rail was the most efficient and effective way of getting the goods to market." Now that is not a direct quote, it is a general quote of what I heard.

I agree with his general statement. Rail is still the way to ship. I wish him all the best.

Many thanks,

Billy C

Even the Big Boys like to play trains.

"I liked the sound of the horns so much, I bought the company."

---Warren Buffett

With Warren landing on Reading Railroad and buying it for $200, would this inspire the other Buffet--Jimmy? Maybe Jimmy Buffet might get to ride around on the BNSF exec train drinking margaritas. If so, maybe he'll come out with an all new CD of choo-choo songs? I'll keep an eye on my local BNSF tracks for any exec train that has an ethanol tanker coupled to it.

Meanwhile, here's how my local news reported the story:
http://www.ksfy.com/news/local/69071772.html


Kent in SD

"I liked the sound of the horns
so much, I bought the company."

--Warren Buffet, 2009

How will BNSF raise sufficient capital now that it is a private company.

I wonder if Warren will let us play with his train set. I'll bet that Tony Lash could get us hooked up with him, you know one railroad tycoon knows each other. I'll even bet that Warren called Tony before the purchase.