Saturday, December 6, 2008

Warren Buffett Is Adding to His Train Set

At 78 years old Warren Buffet is still playing with CHOO CHOO TRAINS, but their no longer the Lionel Trains from childhood day's. Looks like the Oracle of Omaha is amassing a large position in his favorite railroad company Burlington Northern Santa Fe(BNI). Buffett has been acquiring a position in this company since early 2007 and buying it on dips in the $70-80 range. He has also used the tactic of selling puts on the stock which pays him  similar to getting a dividend. If the stock hits his strike price the stock is put to him . If the stock never hits his strike price he pockets the option premium. Earlier in the year the stock almost hit $115 per share but has fallen back with the over all market. Here is a link to Berkshire Hathaway's(BRKA,BRKB) current filing.

also be sure and check the link to Gurufocus:


  1. I recently picked up shares of Union Pacific.

    I am curious why Buffett prefers BNI..They have an almost identical market cap, and most ratios, except BNI has a lower estimated F P/E and a better return on average equity. Since their railroad lines in the southwest and west are almost identical, I wonder what you may think Buffett sees as BNI's advantage?

  2. I believe BNI has larger and direct exposure into China market, they also have some canadian provinces plus 5 extra states which run into the southeast. Plus I think they handle more coal. Both look similar in numbers, but Warren obviously see's something in BNI

  3. Interesting, that makes sense. Thanks.

  4. I may want to pick up a few shares myself. After a recent trip to Italy, I find it puzzling why the US has completely abandoned the rail system for consumer travel and allowed the auto industry to destroy the mass transit systems in this country. Well, I guess some of the greed has finally caught up with them after 60 years. And unfornutely its probably going to take $8/ gallon or more prices to cause any changes.