Eastern Railroad Discussion > W. Buffett buying Union Tank Car [UTLX] owner "Marmon"

Dec. 26 news from RAILWAY AGE Magazine: Warren Buffett is at it again. "Marmon Holdings" [UTLX] is becoming his property (by a 60% financial holdings stake) -- presumably that includes all "UTLX" freight cars in N. America.....
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Buffett buying Union Tank Car owner

Warren Buffett's Berkshire Hathaway has reached an agreement to buy 60% of Marmon Holdings for $4.5 billion and plans to acquire the remaining 40% over the next few years at a price based on the conglomerate’s future earnings. Union Tank Car is a major Marmon property and will be a substantial addition to Buffett's rail industry interests, which include equity positions in BNSF, Union Pacific, and Norfolk Southern.

According to press reports, Buffett completed the Marmon deal in just about two weeks, having been first approached in early December by a Goldman Sachs banker representing Marmon's owners, the Pritzker family of Chicago, at a rally for Senator Hillary Rodham Clinton in San Francisco.

How might Mr. Buffett's purchase affect railroading? Do you think his action is in anyway related to CN's acquisition of ANY? E.g. tank cars...oil in the sand? Aaron 19

It has nothing to do with CN. My guess is that it has more to do with ethanol.

tucker Wrote:
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> It has nothing to do with CN. My guess is that it
> has more to do with ethanol.


My guess would agree with Tucker. Ethanol maybe the key to Buffet's acquisition. It maybe not obvious to the business sector, but the railfan's may have this one correct.


Cass Telles
"Slow-Approach-Slow" - 'Go by way of the B&O'
Railroads of NW Ohio
http://www.trainweb.org/rrnwoh

Keep in mind that Buffet and his partner Munger have both made statements against Ethanol. Both of them said it at least twice each at the Berkshire annual meeting in May. They both thought this would be a flash in the pan. I think Buffet thinks the company as a whole is "undervalued".

As you share that UTLX's acquisition was more centered around Ethanol, I'm back wondering if the oil in Alberta will move by tank car? So much money to buy and track/bridge rehab invested for what?
Aaron 19

UTLX has several annuity type / recurring fees businesses that would appeal to Mr. Buffett. They manage tank car fleets for shippers, they service and repair cars for customers, and they manage inventories of lease equipment. It's a tough business to break into, due to the way companies relate to their shipping partners.

As chemical and other firms increasingly outsource their components, having a dependable partner handling logistics and tank fleet could be very useful. You don't want your tank car used to ship somebody else's horse urine, you want your stuff kept in your control.

The EXSIF product is also quite interesting, and many of us have seen them. It's a tank inside a steel cage, so it can be double stacked on a rail car, and transferred to a truck for final placement.

Ya know just by buying stock in something he drives the price up and it favors him too. ;) I wonder how many investors follow his coat tails presuming that anything he buys is a good investment?

wabash2800 Wrote:
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> Ya know just by buying stock in something he
> drives the price up and it favors him too. ;) I
> wonder how many investors follow his coat tails
> presuming that anything he buys is a good
> investment?

Many do, but few people lack his patience, which sometimes lasts decades.

Berkshire Hathaway has an exemption on prompt filing rules for many of its operations to avoid the stampede effect. They tend to report positions months after they bought the securities.

Barron's Magazine did an article a few issues ago in which they concluded the market capitalization of Berkshire Hathaway's public stock was significantly greater than the combined values of the individual companies it owns. The difference was the respect many investors have for the Great One and his decades of solid performance. Or, paying more for the sum of the parts, than for the individual parts, if you view BRK as overpriced.

Trolley bus fans will recognize the name Marmon-Herrington as builder of many trolley coaches in the 1930's and 40's. Milwaukee, for one, had a large fleet of them.

Pepperidge