Tuesday, November 03, 2009

Warren Buffett buys Burlington Northern Santa Fe; analyst says it's a big bet on the future of coal

Berkshire Hathaway Corp. will pay $26 billion for the approximately three-fourths of Burlington Northern Santa Fe Corp. that it doesn't own, marking Berkshire Chairman Warren Buffett's biggest deal ever. BNSF hauls much grain and coal in the Midwest.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, told Reuters that the deal is a bet on the future of coal. "Buffett is trying to get into coal, but doing it in a cheaper way," Ablin said. Nick Zieminski of Reuters writes, "With Berkshire's support, BNSF would be able to invest in its infrastructure and not have to worry about meeting quarterly expectations, said Thomas Russo, a partner with Gardner Russo & Gardner in Lancaster, Pa., which counts Berkshire as its second-largest holding." (Read more)


neroden@gmail said...

Wow, what a misinterpretation. This is not a bet on the future of coal. It's a bet on increased costs for truckers.

Allen said...

Why does the media keep saying this is about coal when less than 1/4 of BNSF's business is based on coal?

Consumer products is the railroads largest division and accounts for over a 1/3 of it's business. Industrial products is also bigger than the coal division.

This buy goes well beyond coal.