Western Railroad Discussion > Warren Buffett Buys Over Four Million More BNSF stock

http://www.cnbc.com/id/28759635

Who is this masked Man?
And is this good?

P5r24

Does he actually personally pick and chose the stocks to purchase, or does he have a huge staff that does the leg work?

P5r24 Wrote:
-------------------------------------------------------
> Who is this masked Man?
> And is this good?
>
> P5r24

A couple of things.

First, and foremost, Buffett has NEVER been a corporate raider. He is not in the business, generally speaking, of buying companies, stripping equity, then letting the remains fall into bankruptcy leaving employees and creditors in the lurch...like Frank Lorenzo and Carl icahn.

Secondly, Buffett has bought good companies, encouraged their good management practices and keeps them good. Which is partly the reason his Berkshire Hathaway stock is about $86,000 a share!

Wow...had to edit the figure UP!

I can think of nothing better than for the Buffett companies to add BNSF to its lineup and move boldly forward into the beginning of the end...yes, it is coming soon...of the Bush recession.

Finally, Berkshire Hathaway, like Microsoft, is an excellent guardian of their own "turf". They are both masters of innovation, (hence NOT corporate rivals,) and if Buffett does gain complete control of BNSF, look for them to become privately held, and enter an era where, unlike UP that has shed its mantle of the "best railroad in America", they will attain and hold that title for many years to come.

Even if they are orange!!

a737flyer Wrote:
-------------------------------------------------------
> P5r24 Wrote:
> --------------------------------------------------
> -----
> > Who is this masked Man?
> > And is this good?
> >
> > P5r24
>
> A couple of things.
>
> First, and foremost, Buffett has NEVER been a
> corporate raider. He is not in the business,
> generally speaking, of buying companies, stripping
> equity, then letting the remains fall into
> bankruptcy leaving employees and creditors in the
> lurch...like Frank Lorenzo and Carl icahn.
>
> Secondly, Buffett has bought good companies,
> encouraged their good management practices and
> keeps them good. Which is partly the reason his
> Berkshire Hathaway stock is about $18,000 a
> share!
>
> I can think of nothing better than for the Buffett
> companies to add BNSF to its lineup and move
> boldly forward into the beginning of the
> end...yes, it is coming soon...of the Bush
> recession.
>
> Finally, Berkshire Hathaway, like Microsoft, is an
> excellent guardian of their own "turf". They are
> both masters of innovation, (hence NOT corporate
> rivals,) and if Buffett does gain complete control
> of BNSF, look for them to become privately held,
> and enter an era where, unlike UP that has shed
> its mantle of the "best railroad in America", they
> will attain and hold that title for many years to
> come.
>
> Even if they are orange!!


Berkshire Hathaway has class A and B shares. Class A shares are currently around $87k a share but have been as high as $147k while Class B shares are currently $2900 a share but have been as high as $4850 a share.

He has the clout to finally ask BNSF to start a steamer program.

CPRR Wrote:
-------------------------------------------------------
> He has the clout to finally ask BNSF to start a
> steamer program.


Um, NOT! While nostalgia is wonderful, I could care less while 2000+ of my union brothers are on furlough boards.

being a descendant of a Q man, and recent escapee of the Great Yellow Borg ( though still a rail), I used to respect Buffett, but putting this kind of money Behind BNSF, who has lost all sense of what they are supposed to be doing is kinda baffling.
I used the think (when I worked for them ) that UP had forgten how to Railroad, but after sitting through BNSF rules class and observing at NOC (in preperation for my current position), I realized UP is closer to their roots, and has a keener eye on the prize than BNSF.

Buffett will become the major shareholder then sell it to the Belgians like he did with Budweiser:(

Obviously you're not aware of the problems the "best railroad in America" BNSF has across Nebraska into Iowa. Best railroad in America, yah right! By the way, I wonder if Buffett is getting some info that makes him think CN may attempt another purchase of the BNSF. Hmmm.

Aaron

a737flyer Wrote:
-------------------------------------------------------

> They are
> both masters of innovation, (hence NOT corporate
> rivals,) and if Buffett does gain complete control
> of BNSF, look for them to become privately held,
> and enter an era where, unlike UP that has shed
> its mantle of the "best railroad in America", they
> will attain and hold that title for many years to
> come.
>
> Even if they are orange!!

start sending him ATSF merchandise. hint, hint.

gp

AaronJ Wrote:
-------------------------------------------------------
> Obviously you're not aware of the problems the
> "best railroad in America" BNSF has across
> Nebraska into Iowa. Best railroad in America, yah
> right! By the way, I wonder if Buffett is getting
> some info that makes him think CN may attempt
> another purchase of the BNSF. Hmmm.
>
> Aaron

Perhaps you could enlighten us about those problems.

If you're going to buy, now'd be a great time to do it with BNI trading at around its 12 month low. . .gad, remember when it was at 114??? Now it's teetering on the cusp of dropping into the 50s. . .

Regarding Warren Buffet, a737flyer reports, in part:
-------------------------------------------------------
> A couple of things.
>
> First, and foremost, Buffett has NEVER been a
> corporate raider. He is not in the business,
> generally speaking, of buying companies, stripping
> equity, then letting the remains fall into
> bankruptcy leaving employees and creditors in the
> lurch...like Frank Lorenzo and Carl Icahn.
>
> Secondly, Buffett has bought good companies...

As a transportation guru, he ain't exactly E. H. Harriman. He bought a huge stake in US Air, which a few short years later entered Chapter 11. And, honest fellow that he is, Buffet would be the first to admit his mistakes.

What Buffet is best at is identifying companies that fellow stock-picking wizard Peter Lynch used to say "have a good story," that are competently and honestly managed, that produce a stream of (generally) predictable annual earnings increases, and whose stock is favorably priced (read low). In this regard, the boy does his due diligence, and does it with great discipline and, well, diligently. BNSF's stock (along with that of the other rails) has fallen off a tad because of the current economy, which to Buffet equates with a buying opportunity. Once he buys into companies, he leaves their competent, honest management in charge -- he's not one to pull up the roots to see how the flowers are doing. He simply sits back and waits, and waits, and waits...and if he has chosen correctly, his company will have a hefty stake of UNREALIZED capital gains in a good business.

What surprises me is Buffet's foray into railroads, because railroads consume capital like no other business (it's not by accident that Amtrak and the established commuter railroads are all begging for bucks to renew infrastructure); generally, he steers clear of companies which require enormous infusions of capital on the grounds that these same capital requirements eat into cash flow. Moreover, his aforementioned venture into US Air (airlines are also prodigious consumers of capital) didn't exactly produce a home run for his Berkshire Hathaway shareholders. In fact, there he struck out.

But that's why his is the richest dude in Omaha, and I'm moldering in retirement in Florida's version of the mortgage meltdown capital of America...

CPRR Wrote:
-------------------------------------------------------
> He has the clout to finally ask BNSF to start a
> steamer program.

I think there is a better chance of them hanging wire first.

billio Wrote:
-------------------------------------------------------
> Regarding Warren Buffet, a737flyer reports, in
> part:
> --------------------------------------------------
> -----
> > A couple of things.
> >
> > First, and foremost, Buffett has NEVER been a
> > corporate raider. He is not in the business,
> > generally speaking, of buying companies,
> stripping
> > equity, then letting the remains fall into
> > bankruptcy leaving employees and creditors in
> the
> > lurch...like Frank Lorenzo and Carl Icahn.
> >
> > Secondly, Buffett has bought good companies...
>
> As a transportation guru, he ain't exactly E. H.
> Harriman. He bought a huge stake in US Air, which
> a few short years later entered Chapter 11. And,
> honest fellow that he is, Buffet would be the
> first to admit his mistakes.
>
> What Buffet is best at is identifying companies
> that fellow stock-picking wizard Peter Lynch used
> to say "have a good story," that are competently
> and honestly managed, that produce a stream of
> (generally) predictable annual earnings increases,
> and whose stock is favorably priced (read low).
> In this regard, the boy does his due diligence,
> and does it with great discipline and, well,
> diligently. BNSF's stock (along with that of the
> other rails) has fallen off a tad because of the
> current economy, which to Buffet equates with a
> buying opportunity. Once he buys into companies,
> he leaves their competent, honest management in
> charge -- he's not one to pull up the roots to see
> how the flowers are doing. He simply sits back
> and waits, and waits, and waits...and if he has
> chosen correctly, his company will have a hefty
> stake of UNREALIZED capital gains in a good
> business.
>
> What surprises me is Buffet's foray into
> railroads, because railroads consume capital like
> no other business (it's not by accident that
> Amtrak and the established commuter railroads are
> all begging for bucks to renew infrastructure);
> generally, he steers clear of companies which
> require enormous infusions of capital on the
> grounds that these same capital requirements eat
> into cash flow. Moreover, his aforementioned
> venture into US Air (airlines are also prodigious
> consumers of capital) didn't exactly produce a
> home run for his Berkshire Hathaway shareholders.
> In fact, there he struck out.
>
> But that's why his is the richest dude in Omaha,
> and I'm moldering in retirement in Florida's
> version of the mortgage meltdown capital of
> America...


Speaking of airlines and railroads, I'm coming to the conclusion that Union Pacific is quite similar to United Airlines. They both sit on the best route structures in their respective industries. Yet, somehow through poor management --both front line and in Omaha or Chicago-- seem to screw it up and miss out on tremendous opportunity. It's ironic to look at early route maps of United. It actually is roughly the same as the original Union Pacific network! If I were a shareholder in either company, I would be furious with the incompetent, self-serving management at the helm. We really do need another E.H. Harriman or Pat Patterson (at United).

stampedej Wrote:
<<<miss out on tremendous opportunity>>>.
What tremendous opportunity are they missing out on ? Please elaborate.

They (UP) have taken a bunch of horribly run railroads and made huge profits at of the entire network, While, Re-investing billions into the infrastructure of these mismanaged railroads and still making a very nice profit.

missedcall Wrote:
-------------------------------------------------------
> stampedej Wrote:
> <<>>.
> What tremendous opportunity are they missing out
> on ? Please elaborate.
>
> They (UP) have taken a bunch of horribly run
> railroads and made huge profits at of the entire
> network, While, Re-investing billions into the
> infrastructure of these mismanaged railroads and
> still making a very nice profit.

I realize we are in the midst of a terrible recession and traffic is down everywhere. However, if you review the day-to-day operating decisions being made at either Union Pacific or United Airlines, you will find much room for improvement. United has essentially let Southwest eat their lunch. TED Airlines is a joke and everyone in the industry knows it. Union Pacific has let BNSF clobber them in the intermodal arena. In fact, let more go a step further and say U.P. has let BNSF clobber them in total carloads period. That sounds like a marketing problem to me and lost opportunity. Forgive my sarcasm, but at times you wonder if the managers are really thinking about 'saving money by having fewer customers which means fewer complaining phone calls and running fewer trains, which means employing fewer TY&E employees and lower diesel costs, and means lower lower track maintenance required which means fewer MOW people which means there will be more money left over for my bonus!' As sad as this may sound, I actually had a railroad manager who thought like this.

Omaha water cooler talk is that he's buying it for resale but that
doesn't rule out trading it for control of CN.

stampedej Wrote:

>
> I realize we are in the midst of a terrible
> recession and traffic is down everywhere.
> However, if you review the day-to-day operating
> decisions being made at either Union Pacific or
> United Airlines, you will find much room for
> improvement. United has essentially let Southwest
> eat their lunch. TED Airlines is a joke and
> everyone in the industry knows it. Union Pacific
> has let BNSF clobber them in the inter modal arena.
> In fact, let more go a step further and say U.P.
> has let BNSF clobber them in total carloads
> period. That sounds like a marketing problem to
> me and lost opportunity. Forgive my sarcasm, but
> at times you wonder if the managers are really
> thinking about 'saving money by having fewer
> customers which means fewer complaining phone
> calls and running fewer trains, which means
> employing fewer TY&E employees and lower diesel
> costs, and means lower lower track maintenance
> required which means fewer MOW people which means
> there will be more money left over for my bonus!'
> As sad as this may sound, I actually had a
> railroad manager who thought like this.


Each railroad has their own forte.. BNSF has the LA/Chicago route fast intermodal traffic ( due to a very direct double track route ), That is for sure. UP will be going after this traffic once there south west double track project is done.
Here are some stats...
UP BNSF
Coal 2,259,463 2,469,809
Automotive 572,377 165,919
Chemical 809,386 428,484
Grain 361,925 578,984
Aggregates 355,147 170,534
intermodal 3,762,325 5,065,005
Total 9,837,371 10,293,522

They each have certain traffic they excel in, But there is no one RR, Clobbering anyone.