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Issue #591

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2014 Media Kit

Buffett boosts US rail stocks

By: | at 08:00 PM | Intermodal  

Major railroads’ shares jumped last week after Warren Buffett’s Berkshire Hathaway, Inc. raised its stake in Burlington Northern Santa Fe Corp. and two other rail companies.

A filing with the US Securities and Exchange Commission on April 6 showed that Omaha, Nebraska-based Berkshire had raised its stake to more than 39 million shares, or a 10.9% stake, in BNSF. The company bought more than 1.6 million shares in the railroad last week.

BNSF’s shares jumped 19% on the New York Stock Exchange.

Warren Buffett’s assistant Debbie Bosanek confirmed that apart from the BNSF share purchase, Berkshire had spent $700 million on one of the additional rail investments and slightly less on the other.

Bosanek did not disclose which other railroads the company had invested in.

Buffett made his name through investing in companies with strong management and businesses he has considered to be undervalued.

The US railroads have seen business boom in the past three years, driven in particular by rising US imports and higher demand for coal from utilities looking for lower-cost alternatives to expensive natural gas.

In early trading, BNSF was up $5.92 at $88.64, down from a high for the day of $89.18. Shares in No. 1 US railroad Union Pacific Corp. were up $5.52, or 5.35%, at $108.72, while CSX Corp. was up 2.71% or $1.11 at $42.07 and Norfolk Southern Corp. was up $2.01 or 3.94% at $52.99.

This took the Standard & Poor’s 500 Railroads Index to a new record high of 422.34, up from the previous record of 404.50 set on Feb. 22., before sliding back to 414.19.

Canadian Pacific Railway was also up 2.7% or C$1.72 at C$65.81 while Canadian National Railway Co. was up C$2.23 or 4.4% at $53.13. Both railroads have significant operations in the United States.

Regional US railroad Kansas City Southern also got a lift from the news, with its stock trading up $1.08 or 3.03% at $36.73.

Genesee & Wyoming, Inc. a holding company for 49 shortline railroads primarily in North America, was up 93 cents or 3.47% at $27.70. (Reuters)