Barney Frank has been calling for a bottom...for years...
Buffet is now a real picker of winners. Like he picked hussein obama
I have a completely opposite take on this: IMO, buying a railroad makes me think Buffett sees an impending all-out economic collapse and deep decade-long depression. In such a case, I’d think a hard physical asset with property rights-of-way that is also a form of economical, basic transportation for good and people would be one the safest bets to make.
Buffet is preparing for TEOTWAWKI.
Without jobs...real jobs...there will be and can be no economic recovery!
Yes...it really is that simple.
How does the cliche go? No fool, like an old fool?
Or maybe the fix is in for some sort of rail subsidy. I hear a lot of talk about high speed rail. Maybe that makes their right-of-way more valuable.
Or maybe they’ll administer the plan.
Of course we don’t know. But given his political connections, he probably does.
And I used to think he was one of the good guys... :(
BN is a well run RR. In the top tier.
BNSF has been pulling out of area’s of the country long before the Obama economy collapsed in a heap. They don’t even make stops in Montana anymore, and they gave up serving the American agriculture industry.
But, if Buffet is tied into the Obama administration how does that not make him a liar? And if he’s a liar, how can one know he’s not lying about this?
I think this is Buffett’s thesis going forward:
1. Moody’s was a dog, and the rating agencies are about to get raked across the coals. So Buffett is selling his position in Moody’s. Has been selling it off all summer. As a result of this sale, he’s going to have some cash.
Another dog going forward is the Washington Post. Buffett is the single largest non-family shareholder the WaPo, and I’d expect to see him start selling his position in this going forward. Buffett has been quoted at length in the last year as being pessimistic on the newspaper business.
Net/net is that he’s got a bunch of cash now and yet more going forward that he’s going to need to put to work.
2. The prospect for huge blowout cap gains going forward is grim. What he needs are businesses that throw off cash. Buffett likes cash flow. Lots and lots of cash flow is the way to attract Buffett.
This, BTW, is one of the reasons why I despise these authors who advise people to “invest like Buffett.” You and I can’t invest like Buffett. We can’t go out and wrap our arms around 25 to 100% of a company and completely capture the free cash flow as it is taken private. What Buffett does and what we can do are two completely different things.
3. BNI has a huge chunk of their business that is still regulated and served under tariffs - eg, the coal transport portion of their business. If you came into Wyoming, you could see these 1.2 mile long coal trains, with three engines up front and two on the tail end, pushing mountains of coal eastwards to the midwest to burn in midwest power plants. The trains leave every day of the year, without stop.
So what if Congress passes cap-n-trade? The costs will merely be passed on down to the ratepayers. BNI will continue to mint coin at the ratepayers’ expense. They simply don’t care. There is nothing extant other than nukes that could replace the huge amount of coal-fired base load power we have in the US... and I don’t see much movement towards sanity in power generation. People keep talking about wind and solar... which is a great way to know that these people aren’t serious. Buffett knows that wind/solar are a con game, won’t amount to a popcorn fart in a hurricane in the total power portfolio and that the name of the game is base load power generation. That means coal or natural gas.
So if you want big cash flow off one of these, you pick up a pipeline company or a rail company. Buffett picked the latter.
4. The non-regulated portion of BNI’s business will turn up eventually, and in the fullness of time, they’ll wrap their arms around yet more freight/intermodal business because they have some of the best service and lower costs than other rail lines. There’s still plenty of regional and local rail lines that they could pick up, part out and use to expand their market.
We know a recovery is in full swing when Soetoro starts taking credit for the economy. Until then it’s still a recession and it’s all Bush’s fault.
What a silly question to ask!
Warren Buffet picks up individual undervalued COMPANIES. The bottom in question is that of the MARKET. There is simply no connection.
They only apply to journalism schools when all other graduate schools have rejected their applications.