UlrichI 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?
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?
Not at all, the shareholders other than Berkshire Hathaway must vote to approve the sale by a 2/3 majority of shares owned. If the sale isn't approved, it won't happen. Don't forget that the purchase price is 40 percent paid for with Berkshire Hathaway stock, so you won't receive it all in cash.
Paul_D_North_Jroltmannd $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 ?
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 ?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
No, it isn't quite as good as ConRail was - for me and BNSF, it was more like $30 to $100 in 10 years = 12.8 per cent, compounded. But hey - I'll take all of that action I can get.
But my point wasn't so much about the return/ gain, as it was that a major US railroad would be so attractive to anyone - let alone Buffett - that he'd buy it all - and that would be such major news. If that had been predicted even 5 years ago, the forecaster would have been either laughed out of the room, or locked up as insane [see the Epilogue of 2001: A Space Odyssey by Arthur C. Clarke about the guy who predicted the salient international events of the 20th Century].
- Paul North.
I live right here in the Omaha area and while I can't quite afford to own any Berkshire stock, I do get to see the multitudes that flock here every year to hear from the Oracle of Omaha. He's been very close to the administration and I believe this move is connected with the overall enviromental plans. BNSF (along with UP) haul most of the low sulfur coal in the US. I may be wrong but I think the Appalachian coal is much higher in sulfur content. New legislation designed to limit the greenhouse gasses will force electric rates up and probably increase the demand for low sulphur coal. This puts BNSF in a very good position to make even more money in the future. The man is very wise and sees the future thru green tinted glasses.
Ricky
I think you're mixing up carbon dioxide with sulfur dioxide. The former is a greenhouse gas, the latter is a precursor of acid rain. Carbon dioxide emissions are created at a higher rate with low-BTU coal (Powder River Basin Coal) than with high-BTU coal (coal from almost anywhere else in the U.S.). Legislation that sought to reduce the emissions of carbon dioxide would be likely to decrease the value of PRB coal, not increase it.
RWM
Railway Man I think you're mixing up carbon dioxide with sulfur dioxide. The former is a greenhouse gas, the latter is a precursor of acid rain. Carbon dioxide emissions are created at a higher rate with low-BTU coal (Powder River Basin Coal) than with high-BTU coal (coal from almost anywhere else in the U.S.). Legislation that sought to reduce the emissions of carbon dioxide would be likely to decrease the value of PRB coal, not increase it. RWM
You are correct, I should have left the greenhouse gasses out. But I will stick with my overall premise since environmental regulations are set to restrict SO2 emissions as well.
RedGrey62 I live right here in the Omaha area and while I can't quite afford to own any Berkshire stock, . . . [snip] Ricky
Actually, an unremarked (here) aspect of this deal will go a long ways towards addressing that problem: The Berkshire Hathaway Class B Shares will be split 50 to 1, which would make their current $3,314 or so value down to about $66.28 each, which is obviously more affordable. (The Class A shares are currently $100,252 each , and are not being split - so no need to discuss them further here.)
That is being done to facilitate exchanging those $60 shares (plus cash) for the $100 BNSF shares that are owned by smaller BNSF shareholders like me; otherwise, I'd get only a handful of the Class B shares and some cash-out money. Also, so that exchange will be free from Federal income tax, or so they say - but I have no expertise in that area at all, so don't take that on my 'say-so' alone.
Paul_D_North_Jrhe Class A shares are currently $100,252 each
This Buffet guy operates in a whole other league, doesn't he.
AgentKid
So shovel the coal, let this rattler roll.
"A Train is a Place Going Somewhere" CP Rail Public Timetable
"O. S. Irricana"
. . . __ . ______
RedGrey62Railway Man I think you're mixing up carbon dioxide with sulfur dioxide. The former is a greenhouse gas, the latter is a precursor of acid rain. Carbon dioxide emissions are created at a higher rate with low-BTU coal (Powder River Basin Coal) than with high-BTU coal (coal from almost anywhere else in the U.S.). Legislation that sought to reduce the emissions of carbon dioxide would be likely to decrease the value of PRB coal, not increase it. RWM You are correct, I should have left the greenhouse gasses out. But I will stick with my overall premise since environmental regulations are set to restrict SO2 emissions as well. Ricky
SO2 has been restricted since the Clean Air Act Extension of 1970 and the National Environmental Policy Act of 1970. Both laws created the demand for PRB coal, which previously had no value due to its low BTU content. While there may be future legislation that further reduces the allowable SO2 emissions, but it's not predicted to create future demand for PRB coal. The growth rates in PRB coal demand that most people are using to make economic forecasts are in the 1 to 2 percent per year range and the lifetime of the PRB that many people are forecasting may be as little as another 20-30 years.
But perhaps others think otherwise.
Railway Man SO2 has been restricted since the Clean Air Act Extension of 1970 and the National Environmental Policy Act of 1970. Both laws created the demand for PRB coal, which previously had no value due to its low BTU content. While there may be future legislation that further reduces the allowable SO2 emissions, but it's not predicted to create future demand for PRB coal. The growth rates in PRB coal demand that most people are using to make economic forecasts are in the 1 to 2 percent per year range and the lifetime of the PRB that many people are forecasting may be as little as another 20-30 years. But perhaps others think otherwise. RWM
Well, I just read the same thing somewhere else about the PRB coal after I posted my repsonse, I guess that makes my statement wrong. Could be only 20 more years of "economical" mining in the PRB. That's why I'm not an oracle
Well, heck, if I was an oracle, I would just correctly pick tomorrow's lottery numbers!
AgentKid Paul_D_North_Jrhe Class A shares are currently $100,252 each This Buffet guy operates in a whole other league, doesn't he. AgentKid
Yes, and in more ways than just that. For example, he's strictly a long-term player - none of the BH shares have ever paid a dividend - the value has been returned to the sharholders solely and simply by capital appreciation = increase in value, when they sell it. His annual report letters have something of a cult following, and others here have mentioned the annual meeting in Omaha. Who else besides Bill Gates could have bailed out Goldman Sachs ? I'll not say that Buffett 'walks on water', but he's an honorable man and a breath of fresh air in a business that seemingly otherwise consists mainly of charlatans.
They pass cap and trade and you can forget PRB coal.Well any coal for that matter.I wont get into the whole bs about that,but I did read an article that BH and Mr B were pleased with the BNSF and their technology advances( all I can think of is ETMS and its not successful by anyones standards) the cutting of its workforce ( red flag!) and its connections with chinese goods. Here is the thing. BN loses coal all they have is Z trains.If people dont start buying a ton of stuff again they wont have that.
Right now I have friends there wondering if they are going to be around.last year they laid off 150 from my old terminal, this year they are threatening to lay off more than 250. Hmmm more money for the stockholders. Buffet does have a rep with moving stuff overseas, but if he can move the railroad to China then I will buy into BH!
Yes we are on time but this is yesterdays train
RedGrey62 Railway Man [snip] The growth rates in PRB coal demand that most people are using to make economic forecasts are in the 1 to 2 percent per year range and the lifetime of the PRB that many people are forecasting may be as little as another 20-30 years. But perhaps others think otherwise. RWM Well, I just read the same thing somewhere else about the PRB coal after I posted my repsonse, I guess that makes my statement wrong. Could be only 20 more years of "economical" mining in the PRB. That's why I'm not an oracle Ricky
Railway Man [snip] The growth rates in PRB coal demand that most people are using to make economic forecasts are in the 1 to 2 percent per year range and the lifetime of the PRB that many people are forecasting may be as little as another 20-30 years. But perhaps others think otherwise. RWM
If I'm not mistaken - 'cause I don't have that issue with me right now - in the 'front' pages of this month's (December 2009) Trains is a 'sidebar'-type article about BNSF and the governor of Montana operning a new 30-mile long branch line to a new coal mine some 100 miles or so from the PRB, which is in a newly-developed coal seam or area that has an expected economic life of like 100 years or so. I submit that merely as 'additional info' - I have no view [yet] on how that affects the PRB or any of the comments above.
Is it a 'done deal'? Not quite yet, methinks. I would hate to pay capital gains taxes on my BNI holdings! I am, per Mr. B's advice, a buy-and-hold investor. What would I do with all that money? I have been trying to get more info from www.forbes.com , but the site is plugged! Would Warren change the name of the railway to "Berkshire & Omaha"? I was never a Baltimore & Ohio (B&O) fan, so would not like to see that. "BHO Motors" is scary enough!
More, as the dust settles....
Hays
BNSFwatcher [snip] I would hate to pay capital gains taxes on my BNI holdings! I am, per Mr. B's advice, a buy-and-hold investor. What would I do with all that money? I have been trying to get more info from www.forbes.com , but the site is plugged! [snip; emphasis added - PDN] Hays
You might not have to pay cap-gains taxes. From "Berkshire Buys Burlington in Buffett’s Biggest Deal (Update5)" at [emphasis added - PDN]:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9_280LfonzU&pos=1
"Stock Split
Most of the shares exchanged for Burlington Northern stock will be Class A shares, Berkshire said. Splitting the B shares is designed to accommodate the smallest holders who elect for a tax-free swap of the railroad’s stock, it said."
- PDN.
New sources are being developed. The 30+-mile BNSF "Signal Mountain Spur", from "Walter Jct." on the Great Falls-Laurel, MT line is an example. Mega trains going to come out of there. The Tongue River Railroad is being opposed by out-of-state NIMBY millionaires, like Forest J. Mars, of non-earned candy inheritance. ***! I gave the 'Trick-or-Treaters' "Snickers Bars" on Saturday. Never again! It will, eventually, be built. Lots of coal along the route, plus a shortened haul to the North Dakota power plants from the PRB. Win-win, except for the NIMBYs.
Also, of interest, is the Basin Electric Power Cooperative's 'Montana Limestone Company's' railroad. It hauls limestone from Warren, MT to a Stanton, ND power plant. The limestone is used for emmision abatement at the power plant. A picture of their "new" ex-CN SD-50Fs is on page 18 of the December Trains. Can anyone object to that, other than truckers?
Paul_D_North_JrIf I'm not mistaken - 'cause I don't have that issue with me right now - in the 'front' pages of this month's (December 2009) Trains is a 'sidebar'-type article about BNSF and the governor of Montana operning a new 30-mile long branch line to a new coal mine some 100 miles or so from the PRB, which is in a newly-developed coal seam or area that has an expected economic life of like 100 years or so. I submit that merely as 'additional info' - I have no view [yet] on how that affects the PRB or any of the comments above. - Paul North.
USGS says 30 years of demonstrated economic reserve for this seam.
BNSFwatcherNew sources are being developed. The 30+-mile BNSF "Signal Mountain Spur", from "Walter Jct." on the Great Falls-Laurel, MT line is an example. Mega trains going to come out of there. The Tongue River Railroad is being opposed by out-of-state NIMBY millionaires, like Forest J. Mars, of non-earned candy inheritance. ***! I gave the 'Trick-or-Treaters' "Snickers Bars" on Saturday. Never again! It will, eventually, be built. Lots of coal along the route, plus a shortened haul to the North Dakota power plants from the PRB. Win-win, except for the NIMBYs.
Regardless, there is still only about 30 years of economically recoverable coal in the PRB, including these expansions of the mining area that you mention.
Additional note on SO2: SO2 emissions are at present regulated to 1.2 pounds of SO2 per million Btu (Public Law 101-549, 1990). Most of the PRB coal currently being mined contains less than 1.2 pounds of SO2 equivalent per million BTU. If the law was changed to reduce allowable SO2 to a significantly lower number, that could actually work against PRB coal because at that point the PRB coal is non-compliant and it could be more cost effective to burn a high-BTU, high-sulfur coal with lower transportation costs, and scrub for the SO2 at the stack.
Railway Man Paul_D_North_Jr If I'm not mistaken - 'cause I don't have that issue with me right now - in the 'front' pages of this month's (December 2009) Trains is a 'sidebar'-type article about BNSF and the governor of Montana operning a new 30-mile long branch line to a new coal mine some 100 miles or so from the PRB, which is in a newly-developed coal seam or area that has an expected economic life of like 100 years or so. I submit that merely as 'additional info' - I have no view [yet] on how that affects the PRB or any of the comments above. - Paul North. USGS says 30 years of demonstrated economic reserve for this seam. RWM
Paul_D_North_Jr If I'm not mistaken - 'cause I don't have that issue with me right now - in the 'front' pages of this month's (December 2009) Trains is a 'sidebar'-type article about BNSF and the governor of Montana operning a new 30-mile long branch line to a new coal mine some 100 miles or so from the PRB, which is in a newly-developed coal seam or area that has an expected economic life of like 100 years or so. I submit that merely as 'additional info' - I have no view [yet] on how that affects the PRB or any of the comments above. - Paul North.
Railway Man Well, heck, if I was an oracle, I would just correctly pick tomorrow's lottery numbers! RWM
23 17 46 11
Railway ManIf the law was changed to reduce allowable SO2 to a significantly lower number, that could actually work against PRB coal because at that point the PRB coal is non-compliant and it could be more cost effective to burn a high-BTU, high-sulfur coal with lower transportation costs, and scrub for the SO2 at the stack.
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