Warren Buffett Makes a $44 Billion (!) Bet on Trains, Buys BNSF
That's Quite a Nice New Toy You Got There, and It's Not Even XmasHas the Oracle of Omaha seen the future? If so, it seems to include more trains, because Berkshire Hathaway, Warren Buffett's investment vehicle, decided to buy the remaining 77.4% of Burlington Northern Santa Fe (BNSF) railway that it didn't already own, and the price tag wasn't small: 44 billion dollars when cash, stock and debt are included. Mr. Buffett says that he's betting on "the United States", because "railroad operators cannot do well unless American businesses were producing goods and customers were buying them." But is it possible that he's also betting that relatively fuel-efficient trains will play a bigger role in the future of transportation?Premium Transportation Network BNSF is one of only four remaining transcontinental railways, and the second largest one in the US after the Union Pacific Railroad. It is said to be better managed and more forward-looking, though (for example, it installed pipes carrying optical fiber next to its tracks in some places, allowing it to carry both heavy freight and digital goods).
The NYT writes:
The deal, which including Berkshire's previous investment and the assumption of $10 billion in Burlington Northern debt brings the total value to $44 billion, represents what Mr. Buffett said was a big bet on the United States.
BNSF is a freight company, but many Amtrak routes use BNSF rails, and maybe one of Buffet's plans is to expand into passenger rail? This could certainly be a growth sector if oil becomes more expensive and low-carbon technologies are given a push because of concerns about global warming.
Trains area already pretty fuel-efficient by amount of weight they carry, but new technologies such as hybrid and electric locomotives could make them even greener.
One of the side benefits of this investment by Mr. Buffett could be rising the profile of rail in the US. This could attract other investors - many of whom try to follow Buffett wherever he goes - and help modernize the rail network in the country.
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