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Last post 11-03-2009 9:14 PM by oltmannd. 52 replies.
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11-03-2009 10:08 AM In reply to
Online CSSHEGEWISCH
Top 50 Contributor
Joined on 12-21-2001
Burbank IL (near Clearing)
Posts 5,390

Re: BNSF bought by Warren Buffet

Since Warren Buffet enjoys a reputation as a relatively passive investor, this move will allow BNSF management the luxury of concentrating on maintaining and running the railroad without having to worry about corporate raiders.

11-03-2009 10:19 AM In reply to
Offline Paul_D_North_Jr
Top 100 Contributor
Joined on 10-12-2006
Allentown, PA
Posts 3,374

Re: BNSF bought by Warren Buffet

oltmannd:
  $100 a share, about $24 over yesterday's close. Not too shabby if you owned any BNI! 

  Just unbelievable - astounding   Who'd a ever thunk it would have come to this ?  Truly this is the big leagues.  That'll surprise - and cuts out - the Wall Street 'quick buck' Mergers & Acquistions crowd.  But ''They'll none of them be missed'' [from ''The Executioner's Song'' in the musical operatta The Mikado by Gilbert & Sullivan - how apt; pun not intended].

I do own a few shares - and I agree with Don's view above.  That'a the good news, for my IRA account . . . and my wife has been wanting to invest in Berkshire Hathaway for a few years, so now I suppose that gets accomplished, too !

  The bad news is that now I'll likely lose out on the opportunity to buy more, as well as the expected price appreciation over the next few years as BNSF continues to profit from its franchise.

I agree with just about all of the posts above.  Notably, Warren is willing to pay that premium to put the transaction beyond any reasonable challenge or doubt of success - which also means he thinks even at that price, it's worthwhile.  What I find a little surprising is that he wanted to buy it all - not just a majority or super-majority to obtain and ensure control.  But he usually does that - if a deal is good, it's good all the way through - and he's been saying for the last few years that he's having trouble finding good places to put his money to good use.  Guess he finally came to understand and believe what a lot of us have been saying for many years. 

Next shoes to drop ?  Buying anything else major in the railroad industry would have anti-trust concerns - except maybe Guilford/ Pan Am, which could use a kick like this, in my opinion.  Maybe he could expand his ownership of Norfolk Southern, and insulate them from each other under his holding company ?  But this morning he said no more railroads, and no more big deals for awhile.  See the transcript of Buffet's call into CNBC this morning at:

http://www.businessinsider.com/buffett-americas-best-years-lie-ahead-2009-11

An excerpt [EMPHASIS ADDED - PDN]

KERNEN: IF YOU HAD TO JUST -- THERE'S A LOT OF REASONS TO LOVE THE RAILS, I KNOW, WARREN.BUT WHAT IS IT ABOUT THE FUTURE THAT MAKES THE RAILS SO ATTRACTIVE? WE'VE GOT TO MOVE STUFF, I KNOW. IS IT BECAUSE THEY CAN DO IT IN  A COST EFFECTIVE WAY?

BUFFETTl THEY DO IT IN A COST EFFECTIVE WAY AND EXTRAORDINARILY ENVIRONMENTALLY FRIENDLY WAY. BNSF LAST YEAR MOVED ON AVERAGE IT MOVED A TON OF GOODS 470 MILES ON ONE GALLON OF DIESEL. IT RELEASES FAR FEWER POLLUTANTS INTO THE ATMOSPHERE. IT SAVES ENORMOUSLY ON ENERGY CONSUMPTION AND, YOU KNOW, IT DIMINISHES HIGHWAY CONGESTION. RAILS LAST YEAR MOVED 40% -- MORE THAN 40% OVER THE COUNTRY. THEY MOVED MORE THAN ALL THOSE TRUCKS JUST THE FOUR BIG RAILROADS IT'S A VERY EFFECTIVE WAY OF MOVING GOODS. I BASICALLY BELIEVE THIS COUNTRY WILL PROSPER AND YOU'LL HAVE MORE PEOPLE MOVING MORE GOODS TEN AND 20 AND 30 YEARS FROM NOWAND THE RAILS SHOULD BENEFIT. IT'S A BET ON THE COUNTRY BASICALLY.

I also wonder if Warren's long-term outlook and access to the Berkshire Hathaway piggy-bank might accelerate BNSF's capital expenditures and improvements - such as electrifying sooner ?  Note also that elsewhere in this transcript, Buffet noted that his utilities haven't been much affected by the recession.  And per other sources, one of Buffet's heir apparents is Don Sokol, Chairman of MidAmerican Energy Holdings Co., which is Berkshire's energy division.  See the following Aug. 5, 2009 article from Bloomberg News:

Buffett Fuels Succession Speculation by Tapping Sokol (Update2)

http://www.bloomberg.com/apps/news?pid=20601103&sid=axaWO.f7GdmQ

Now, if Warren would do something else with the 'Berkshire' portion of the compoany's name - like 'adopt' and sponsor or run one as an icon or 'mascot' on BNSF - none of whose constituent lines ever had a major fleet of 2-8-4's, I believe - then we'll be all set . . .

- Paul North.

11-03-2009 10:28 AM In reply to
Offline Paul_D_North_Jr
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Joined on 10-12-2006
Allentown, PA
Posts 3,374

Re: BNSF bought by Warren Buffet

BNSFwatcher:
  Park Place and Marvin Gardens, as well as Pacific, North Carolina, Pennsylvania, and Boardwalk are already owned by Donald Trump.  Mr. B. doesn't have a chance!  "The Donald Rules!". 

The only places 'The Donald' rules - and deserves to live - are his own dunghills.  How many bankruptcies have he and his entities been through ?   

It's a travesty to mention him in the same paragraph with Warren Buffett.  Buffet's pocket change could buy Trump's entire empire, with some left over. 

Trump, his ego, and his toupee refuse to acknowledge, accept, or work within reality, and his track record for his investors is miserable, if not scandalous.  Buffett's been pretty much the opposite for many years.  My money's on Warren - but Trump, I just ignore - turn the page or change the channel, as appropriate.

- Paul North.

11-03-2009 11:03 AM In reply to
Offline Victrola1
Not Ranked
Joined on 12-28-2001
Posts 302

Re: BNSF bought by Warren Buffet

 Like the barons of a century ago, is a private railroad car in the offing for the owner?

11-03-2009 11:37 AM In reply to
Offline clarkfork
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Joined on 08-05-2008
Posts 61

Re: BNSF bought by Warren Buffet

Maybe passenger trains with buffet cars.

11-03-2009 11:50 AM In reply to
Offline Ulrich
Top 500 Contributor
Joined on 02-11-2003
CA
Posts 1,057

Re: BNSF bought by Warren Buffet

how does that work for the other shareholders...shareholders no more? What if I don't want to sell my shares?

11-03-2009 12:00 PM In reply to
Offline Railway Man
Top 150 Contributor
Joined on 11-25-2007
Posts 2,812

Re: BNSF bought by Warren Buffet

Ulrich:

how does that work for the other shareholders...shareholders no more? What if I don't want to sell my shares?

 

Your shares are cancelled, and the cash value goes into an escrow account for you.  You can collect the money if you wish.

RWM

11-03-2009 12:04 PM In reply to
Offline Mookie
Top 10 Contributor
Joined on 06-06-2001
US
Posts 10,208

Re: BNSF bought by Warren Buffet

Keep waiting for the other shoe to drop.  So far it has all been pretty positive. So what's the down side of all this?  I'm sure there must be be a wrinkle in all this "good news". 

11-03-2009 12:14 PM In reply to
Offline CShaveRR
Top 25 Contributor
Joined on 06-27-2001
Lombard (west of Chicago), Illinois
Posts 8,822

Re: BNSF bought by Warren Buffet

The only downside I've heard about so far is the man's reportedly heavy-handed dealing with organized labor. I'm not so sure that that's even an issue, since the railroads usually join together for negotiations (by coincidence, the UTU just publicized its Section 6 notices for the next contract today).

Meanwhile, on a day when the Dow Industrial average is somewhat down, the Transportation index has taken off--with all railroad stocks advancing markedly. BNSF has gained over 20 bucks a share, and UP is up over three dollars. The other railroads, not as much--but still all up by over a dollar a share.

SJ, I guess for you the biggest downside would be that BNSF's headquarters are supposed to remain in Fort Worth.
11-03-2009 12:30 PM In reply to
Offline Ulrich
Top 500 Contributor
Joined on 02-11-2003
CA
Posts 1,057

Re: BNSF bought by Warren Buffet

I like Buffett..he's a smart man and a likeable individual. However, there is a downside for some of us smaller shareholders... This transaction highlights how little control we actually have over our own property. I would really be concerned if my retirement savings were riding on the fortunes of BNSF...following Buffett's own advice..invest in a FEW good businesses (like BNSF)...But what if i'm 65 and I'm suddely kicked out into an escrow account?

11-03-2009 12:40 PM In reply to
Offline Victrola1
Not Ranked
Joined on 12-28-2001
Posts 302

Re: BNSF bought by Warren Buffet

 The prophecies given as why to buy may stand a better chance of coming true. Money is power and with the money to buy BNSF, decision makers do not dismiss what the new owner advocates.

 

11-03-2009 12:44 PM In reply to
Offline CNW534
Not Ranked
Joined on 07-13-2006
Wisconsin
Posts 134

Re: BNSF bought by Warren Buffet

Could be worse.  BNSF could have been bought by Rupert Murdoch.  Your division supervisor could have been Bill O'Reilly.

11-03-2009 12:46 PM In reply to
Offline AgentKid
Not Ranked
Joined on 08-16-2008
Calgary AB. Canada
Posts 394

Re: BNSF bought by Warren Buffet

Quote from the article on TRAINS Newswire:

"There aren't a lot of people that can write $44 billion checks anymore,"

Oh, yeah!

AgentKid

 

11-03-2009 12:48 PM In reply to
Offline Heartland Division CB&Q
Top 150 Contributor
Joined on 01-25-2007
Kentucky
Posts 2,931

Re: BNSF bought by Warren Buffet

Warren Buffet said the deal is “all-in wager on the economic future of the United States.”

However, BNSF hauls vast amounts of imported products from ports of Los Angeles and Long Beach.

11-03-2009 12:48 PM In reply to
Online oltmannd
Top 50 Contributor
Joined on 01-17-2001
Atlanta
Posts 4,780

Re: BNSF bought by Warren Buffet

BNSFwatcher:

Park Place and Marvin Gardens, as well as Pacific, North Carolina, Pennsylvania, and Boardwalk are already owned by Donald Trump.  Mr. B. doesn't have a chance!  "The Donald Rules!".

Isn't he bankrupt (again)?
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