Upstream | November 03, 2009 | 4 comments

Warren Buffett Makes a $44 Billion (!) Bet on Trains, Buys BNSF

source: http://www.treehugger.com/files/2009/11/warren-buffet-buys-bnsf-railway-trains-berkshire.php

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Has the Oracle of Omaha seen the future? If so, it seems to include more trains, because Berkshire Hathaway, Warren Buffett's investment vehicle, decided to buy the remaining 77.4% of Burlington Northern Santa Fe (BNSF) railway that it didn't already own, and the price tag wasn't small: 44 billion dollars when cash, stock and debt are included. Mr. Buffett says that he's betting on "the United States", because "railroad operators cannot do well unless American businesses were producing goods and customers were buying them." But is it possible that he's also betting that relatively fuel-efficient trains will play a bigger role in the future of transportation?


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BNSF is one of only four remaining transcontinental railways, and the second largest one in the US after the Union Pacific Railroad. It is said to be better managed and more forward-looking, though (for example, it installed pipes carrying optical fiber next to its tracks in some places, allowing it to carry both heavy freight and digital goods).


The NYT writes:

The deal, which including Berkshire's previous investment and the assumption of $10 billion in Burlington Northern debt brings the total value to $44 billion, represents what Mr. Buffett said was a big bet on the United States.

BNSF is a freight company, but many Amtrak routes use BNSF rails, and maybe one of Buffet's plans is to expand into passenger rail? This could certainly be a growth sector if oil becomes more expensive and low-carbon technologies are given a push because of concerns about global warming.

Trains area already pretty fuel-efficient by amount of weight they carry, but new technologies such as hybrid and electric locomotives could make them even greener.

One of the side benefits of this investment by Mr. Buffett could be rising the profile of rail in the US. This could attract other investors - many of whom try to follow Buffett wherever he goes - and help modernize the rail network in the country.

http://www.treehugger.com/files/2009/11/warren-buffet-buys-bnsf-railway-trains-b...
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4 comments // Warren Buffett Makes a $44 Billion (!) Bet on Trains, Buys BNSF

  • digitrash
    • 0
      digitrash  

    • This is a really interesting investment play from Buffett. California's High-Speed Rail plans already call for using a lot of the existing BNSF right-of way. If similar plans across the USA also leverage BNSF tracks he would be surely be in a position to profit.

    • 2 years ago
  • CreditFigaro
    • 0
      CreditFigaro  

    • Good lord. How did he get $44 BILLION? I can't wait till this guy dies and we can estate tax the shit out of this guy. (though he probably made plenty of good planning decisions to make sure he doesn't have to pay everything)

      Just with the balance of this purchase subject to the estate tax, the government could end world thirst.

      Didn't they build the original railway when he was growing up?

      I wish he would have done something else: maybe something new or philanthropic.

    • 2 years ago
  • Thhines
    • 0
      Thhines  
    • CreditFigaro:

      He actually proposed and said he should be taxed higher. He was one of the huge supporters of Obama throughout the entire campaign. As well has some of the largest (non-profit)organizations in the world, and a humanitarian.

    • 2 years ago
  • CreditFigaro
    • 0
      CreditFigaro  
    • CreditFigaro:

      Fair enough. I read up on the guy and he seems alright. His views on the economy and the estate tax make a lot of sense. He is a philanthropic guy.

      I stand corrected.

      Thanks for calling me out.

    • 2 years ago
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