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Yesterday it was announced very loudly that "my pal Warren" was going to acquire the 77.4% of the Burlington Northern Santa Fe (NYSE: BNI) railroad, that Berkshire Hathaway (BRK.A) does not already own, for $100 per share, offering about a $24 premium to Mondays closing price.Talk about putting your money where your mouth is -- yikes! Buffett has gone all in, betting the economy is healing, and silencing anyone that questioned his integrity or motives for cautious optimism saying it was all talk!
It was one day before Berkshire announced its initial purchase of BNI that I posted Serious Money: Freight Railroads - BNI, CSX, UNP & more on April 6, 2007. Two years later, last April I posted another story Chasing Value: Watch BNI -- the heck with Citigroup after another misguided analyst made what I thought was an untimely error.
So perhaps the BNI may become the 'Berkshire Northern Railroad' as it covers much of the heartland, Buffett's base of operations. This combined with the 50 to 1 stock split seems to be "laying the track" for Buffett's successor.
A lot of questions still linger in my mind.
- Will BNI be the last major purchase under Buffet's leadership?
- Why did Buffett choose not to buy cheaper shares in the open market?
- Are there complimentary feeder business' that might be new acquisition targets?
- Does this acquisition of BNI signal the all clear sign as the stock market reacted or was it just the right time for this purchase based on issues specific to Berkshire?
- Will Buffett pursue increased stakes in other railroads, and will the government allow it?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B.
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Reader Comments (Page 1 of 1)
11-04-2009 @ 6:15PM
PSman said...
What effect does the Buffett purchase of BNI have on my shares held by TDAmeritrade?
11-04-2009 @ 6:25PM
Sheldon L said...
PSman,
1) In the short term your shares increased in value to reflect the $100 per share offer which assumes the deal will be approved.
2) If BNI shareholders approve the sale your TD account will record the sale of your shares giving you the cash.
Seems like you made a solid investment.