Buffett's railroad move: A win for BNI shareholders

Posted Nov 6th 2009 9:00AM by Joseph Lazzaro
Filed under: Deals, Berkshire Hathaway (BRK.A), Burlington Northern Santa Fe (BNI)

Warren Buffett's (NYSE: BRK.A) decision to buy the 77.4% shares of Burlington Northern Santa Fe (NYSE: BNI) that he did not already own, for $100 each in cash and stock, is like an early holiday present for BNI shareholders.

And first recommended on April 30, 2009 at a price of $67.81, that means BNI shareholders will earn a cool 47% for their April-bought shares. Not bad for a six-month investment. I would say BNI probably was worth 10-15% more, but BNI shareholders will take the immediate pay-off, just the same.

Buffett's move also reflects his stance toward U.S. railroads, a sector I like, too.

"Our country's future prosperity depends on its having an efficient and well-maintained rail system," Warren E. Buffett said in a statement. "Conversely, America must grow and prosper for railroads to do well. Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry."

The Bottom Line for investors: The rails, for highway-congestion and climate change reasons, will play a larger roll in container and commodity transport in the United States in the decade ahead.

Tags: BNI, BNSF, BRK.A, inthenews, trains, Warren Buffett