Billionaire
investor Warren Buffett of Berkshire Hathaway
filed reports this week indicating that
he has continued to add to his earlier investments
in railroad stocks.
Earlier
in the year, Buffett disclosed Berkshire
Hathaway had invested in Burlington Northern,
Norfolk
Southern, and Union Pacific. (See Increased
Investment in Rail Carriers by Legendary
Warren Buffett a Sign of Carriers’
Pricing Power.)
This
week came news that Buffett has added to
his Burlington Northern stake, acquiring
another 10.1
million shares, increasing Berkshire’s
ownership of the railroad operator to nearly
14.8% from 11.9%.
Do
Buffett’s actions indicate the rails
may be a good investment for others? Maybe.
Amid a big selloff on Wall Street today,
Burlington Northern’s stock price
was down under $79 per share despite the
Buffett news, which generally sends the
stock prices of companies Berkshire
invests in soaring. The stock price is also
off nearly 20% from its 52-week high of
$95.47 per share.
As we noted
at the time, Buffett likes to invest in
stocks that have a strong level of pricing
power, something that has certainly been
true of the rail stocks the past few years,
and a trend Buffett likely expects will
continue.
Maybe that’s
bad news for rail shippers, but potentially
interesting news to those who might consider
investing in the rails.
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