Railroad
stocks jumped today as word came that legendary
investor Warren Buffett of Berkshire Hathaway
had accumulated 11% of rail carrier Burlington
Northern’s stock, and also invested
in two other undisclosed rail carriers.
The moves were reported in SEC filings
required when Buffett’s stake in Burlington
Northern reached certain thresholds. The
other two investments are below those thresholds
for disclosure, but The Street.com’s
Jim Cramer has speculated those two carriers
may be Norfolk Southern and Union Pacific.
In any case, every rail stock surged Monday
on the news. Burlington Northern, for example,
was up 6.5%.
What’s interesting to Supply Chain
Digest is that Buffett likes investing in
stocks that he believes have strong pricing
power. Research by Bear Stearns and
others have found rail rates continuing
to stay strong even as truckload rate hikes
are moderate, and this is at least one indication
that may be the case for years to come.
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