Big news the Monday after Easter: Warren Buffet, the richest man in the United States, has begun buying large amounts of railroad stocks!!! Well, with a company name like "Berkshire", they should be buying railroad stocks...
Berkshire Investment
Boosts Rail Stocks
By DESIREE J. HANFORD
April 9, 2007 2:05 p.m.
News that Berkshire Hathaway Inc. has taken a stake in Burlington Northern Santa Fe Corp., as well as potentially two other U.S. railroads, sent shares of railroads sharply higher Monday.
The stake by Warren Buffett's company comes at a time when the sector's first-quarter results are expected to be hurt by weak volumes, particularly in the auto and housing sectors, and winter-like storms that cut into coal carloads for some railroads. In recent months, some analysts have trimmed their earnings estimates for major railroads.
"[The investment] probably points to his belief that the fundamental business proposition underlying the railroads remains intact despite near-term projections for volume weakness in 2007," Fitch Ratings analyst Steve Brown said. "He's probably looking at this, still, as a value play."
The stake by Mr. Buffett, considered one of the world's savvier investors, sent shares in the three biggest U.S. railroads by revenue to fresh 52-week highs.
Recently, shares of Burlington Northern were up 8.6% at $89.91, Union Pacific Corp. gained 5.3% to $108.63, and CSX Corp. rose 2.6% to $42.02. Shares of Norfolk Southern Corp., the fourth-largest railroad in the U.S., advanced 4.1% to $53.07.
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Berkshire Hathaway disclosed Friday in two filings with the Securities and Exchange Commission that it had purchased 39 million shares of Burlington Northern at share prices up to $81.80. That gives Berkshire a 10.9% stake in the railroad, becoming its largest shareholder.
SOURCE: Wall Street Journal: 9 APRIL 2007: Berkshire Investment Boosts Rail Stocks
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