najdorf

Buffett's Big Rail Buy: What It Means for Berkshire Shareholders

bottoms-up: It's hard to pump a dump a company by buying 100% of its shares with cash and your own shares. You can be sure that Buffett believes BNI is a good buy - whether he's right or not is of course debatable.

Also bear in mind that RRs transport over 40% of goods in the US, are more efficient than trucking/air, and are a primary mode of transportation in developed areas such as Europe, Japan, and the urban East Coast of the U.S. So we're not exactly talking Dr Quinn Medicine Woman stuff here.

On Buffett-Back Riding

Artful Dodger: You're simply wrong about Buffett's stock selections. First of all, he was nothing but a stockpicker in his early days when he achieved returns in the high 20% range. Secondly, take a look at the table on page 15 of www.berkshirehathaway..... I realize that it's not up to date, but I think it pretty effectively makes the point that Buffett has done very well with some stock selections: Washington Post, Coke, and AXP/WFC if they ever come back (doing better than other financials anyhow - we'll see). He made a great medium-term trade in PetroChina a few years back. He started in GEICO as a stock investor, although he eventually made it a fully-owned BRK company. He played FNM/FRE very intelligently and got out at the right time. Of course everything he's bought in the last couple years is down, when every stock is down, but that doesn't mean stock picks haven't been effective. Think about the investments that 20 years of Coke dividends have funded.

More importantly, I can't think of a major Buffett stock holding that has totally blown up. He has achieved the returns without taking big risks. Anybody can buy a basket of pharmaceuticals with drugs in testing or trade tech startups during the bubble and possibly get lucky - but they're going to also lose big chunks of money at times. Buffett hasn't picked positions that lost big sums of money.

Following Buffett's Railroad Tracks

Dave: That's the least true characterization of Buffett that I've ever heard. He's talked endlessly about valuing companies based on earnings/cash flow/book value rather than looking at the stock price all the time. Stock prices follow earnings quite closely in the long term, and he has said that his ideal holding time is forever. He tries to purchase companies at a discount to value, and CNI offered a great opportunity for such earlier this year. Now it's up a bit, but it's probably still pretty good at today's prices.

Interesting recommendation on TRN - I will examine further, but I wasn't aware of the company and like the sound of it.