Smart investment, Mr. B. (I always bought the railroads when I played Monopoly... nice income stream...)Burlington Northern added $5.45 to $88.17 after Berkshire bought a 10.9 percent stake in the company, which is one of the largest train companies in the United States. Berkshire had accumulated 39 million shares of the company as of Thursday, paying between $81.18 and $81.80 for the final 1.6 million, according to regulatory filings.
Berkshire bought "major" stakes in two other unidentified North American railroads, CNBC television reported, citing an interview with the head of Berkshire, Warren Buffett.
Other companies in the railroad transportation sector, including CSX,Union Pacific and Norfolk Southern , were buoyed by the disclosure.
Commuter rail works in dense urban areas, when heavily subsidized, and absolutely worth the cost in traffic and pollution avoidance.
Although as an admitted, card-carrying railfan it pains me to say this, intercity passenger rail in America (now consolidated as Amtrak) should have been euthanized in the 1970s, and outside of areas like the Boston-Washington corridor, it has been a shriveled husk of its former self, in a kind of living death, for the last four decades. (Passenger rail works in Europe and Japan because of the relatively short distances involved; in the US, cheap airfares made it irrelevant and would have killed it long ago if not for massive government intervention. )
But freight rail in North America is a great business that is more relevant than it has ever been.
Transporting freight by train costs less per mile and is more energy-efficient than trucking; these economies are multiplied when freight is packaged in standardized shipping containers, meaning that they can go straight from ship or truck to train (and vice-versa) without unloading and reloading.
In the long term, fuel and transportation costs are going nowhere but up. The train vs. truck equation is going to be tilting even more heavily in favor of trains... and Buffett, who is more of a buyer than a trader (he rarely liquidates a position; he buys and plans to hold for the foreseeable future) is in this for the long haul, pardon the expression.
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