bearfund

Buffett's Buying More Burlington; Should You?

At $78? Sure, that's a bargain; Buffett knows a good deal when he sees one. Up 12% from there? That's a lot to give up. I think I'll wait to buy more; we're probably going to revisit the lows at some point in the next 6 months.

Following Buffett's Railroad Tracks

irisatrx has it just about right. Or rather, I don't believe this is what Buffett intends to do, but it's what happens anyway. I agree with RightinSanFrancisco that CNI has an excellent business and is undervalued. I keep wanting to buy BNI but CNI is so much cheaper by just about any metric that I can never bring myself to do it. It's a good company, it's just too damned expensive. I blame Buffett for that 100%.

Blasphemy: Burlington Northern Shouldn't Be Held

What are you talking about, Charles? UPS already uses rail, has for a long time. And in fact they are a major BNI customer. Not only that, BNI does plenty of business on their Sunset route, which connects LA with the east via BNI's southern "Transcon" routing. That alignment is highly favourable, especially if you like the population growth story along that corridor, and it is not "in disrepair"; BNI has been actively upgrading that route in many locations. And, yes, intermodal traffic is heavy on that route, including inland runs from LA (if you don't believe this, park your car in the Cajon Pass on I-15 and watch the trains go by on UP and BNSF trackage).

You seem to be bullish overall on rail transport, and I agree. Trucking is dead with oil above $100, and railroads and ships will be the beneficiaries. That said, I agree with the author that BNI is overpriced. Buffet's entry points in the low 80s look good to me, and I would buy anywhere below 85. Until then, I like CNI, which also does good and growing intermodal business at Prince Rupert, has a good Canadian commodity story, is cheaper relative to earnings, and offers a better yield. The downside risks are bad winter weather that kills Q1 earnings seemingly every year and regulatory meddling. Picking up CNI anywhere below 50 is a smart move.