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Elephant bags his Buffett



November 03, 2009 – Comments (1)

Mission completed. Rail giant Burlington Northern (NYSE: BNI) shot and killed a massive, $155 billion elephant with this selloff to Berkshire Hathaway (NYSE: BRK-A).

For his $44 billion in cash and shares, Buffett will get a piece of dying industry,  $11 billion of net tangible assets (mostly rusty rails and crappy railroad cars), and an annual free cash flow of slightly greater than $1 bln. With any luck, 30 years from now he will recover his principal if the rusty railway doesn't fall apart by that time. More likely, though, I think there will be a sudden about-face in a few months, and BNI will join COP as another failed investment idea of Buffett, who, may I remark here, is slowly but steadily going Jim Cramer.

1 Comments – Post Your Own

#1) On November 04, 2009 at 1:15 AM, streetflame (29.23) wrote:

I agree.  Think of the companies he could have bought instead for ~$44B.  For example Ternium + Fairfax Financial + ENSCO + Agrium + Coca Cola FEMSA.

And he chooses BNI??? That's it, my green thumb of BRK-B is over.

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