Warren Buffett’s Berkshire Hathaway upped its stake in Burlington Northern yesterday, paying about $26 billion for the rest of the big railway system.
Warren’s trains: Burlington Northern locomotives in Kansas City. (AP Photo/Charlie Riedel)
Is the purchase all about playing with trains? Not really. Buffett said it’s a bet on the U.S. economic recovery, that moving goods around will surge when things pick-up again.
It’s also seen by some as a big bet on coal. B&N’s system goes through Wyoming’s Powder River Basin, which is the primary source for a lot of the low-sulfur coal many U.S. power plants rely on these days to keep down their emissions (including the W.A. Parish plant south of Houston).
Buffett also owns MidAmerican Energy, which owns nearly a dozen coal fired plants among its many assets, so “The Oracle” has more than fleeting interest in coal.
What does the timing of Buffett’s purchase say? He’s known for being simply the best at buying undervalued assets at the bottom of the market. Does that mean we’re at the lowest point in the downturn?