I ran across this article on Yahoo! finance today from Money Magazine regarding why Warren Buffet and Berkshire Hathaway are investing in railroads. Its the same thing I've been saying here at Freightdawg.com for almost a year. (It's the economy silly!)
This is an interesting article, but frankly theres more and better content here at the dawg on this. The nut of it is that Buffett sees that railroads are a very cost efficient way to transport goods and are the key to transporting key energy crops like corn and soybeans as well as coal.
Buffett has also been smart in buying vertically into railroad industries like tank car production with acquisition of Union Tank Car. Check out the "railroads" section here at Freightdawg.com for complete coverage of this subject going back for months!
These "Money" and CNN guys really need to read Freightdawg.com to keep up with "what's what" in logistics news!
Money
Why Warren Buffett is buying railroads
Wednesday March 12, 6:27 pm ET
By Michael Sivy, Money Magazine editor at large
Want to invest in a green industry that employs the latest technology, reduces U.S. oil consumption and is priced very attractively? Look no further than the railroads. Laggards for decades after the 19th-century boom ended, they're hot again. "There was steady traffic growth until last year, and the trend
looks good once the economy gets back up to speed," says Kenneth
Kremar, an economist who follows the railroad industry for consulting
firm Global Insight. Perhaps that's why railroad stocks have largely
escaped the battering that other sectors have taken so far this year. Of
course, their business could still be hurt temporarily if the economy
deteriorates further. But eventually, says Kremar, "we'll see a pickup
in demand, especially in the kinds of commodities railroads carry."
Astute
investors are climbing aboard. Warren Buffett has been loading up on
shares of Burlington Northern Santa Fe and was buying in January at
prices only 13% below current levels. (News of his buying boosted the
stock.) At last count, he owned more than 18% of the company.
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