Comments on: MORNING MUSINGS – MARKET CHEERS THE BUFFETT BUY

By: kbob

kbob — Wed, 04 Nov 2009 14:41:37 +0000

Also let’s not forget disastrous Conoco Philips stake he purchased at the peak of the oil run up in 2008

By: CB

CB — Tue, 03 Nov 2009 20:56:55 +0000

TPC, agree with you this is a high valuation play and is betting on a lot more uncertainty than the deals that made Buffett known to all investors. I understand that rails should rise as the economy recovers, but from a pure operational stand point BNI’s operations have to grow significantly for this to be considered a value play in any sense. Basically, they rail operations have to more than recover for this to be cheap. The energy play makes some sense, but don’t tell me Buffett would jump out of a plane with the odds of that materializing the way people seem to think. In 1975, they thought the world would be ruled by solar energy in the 2000s. There’s a lot of government regulation that can make or break the energy play. The question of coal, remains one I must research further before making any comments on. But we know this is a long-term purchase of at least 2 years or more.

By: TPC

TPC — Tue, 03 Nov 2009 19:06:28 +0000

I think people are missing the point here. It’s not that I don’t see what Buffett is doing, but that he seems to be deviating from his traditional merger approach. This is not a typical Buffett purchase. A high valuation, stock deal, “all in” looks more like a last hurrah for the Oracle as opposed to a keen long-term investment.

By: jrsun

jrsun — Tue, 03 Nov 2009 19:01:13 +0000

That’s right.

People short-sighted start to comment on why Buffet can’t see what they are seeing.
LOL.

By: john yang

john yang — Tue, 03 Nov 2009 17:01:45 +0000

It looks like an eco recovery plus anti-inflation move for me. which means Buffet or his advisors see US economy will eventually recover, and oil is going to rally with possible hyper inflation in the economy. Transportation is the best “simple and anti-inflation” business model in this future economic environment.

I believe warren has made a right move. In this risk environment, it is debatable which way the market is going to go, so buy value seems to be a good approach.

By: Doug Terpstra

Doug Terpstra — Tue, 03 Nov 2009 16:56:03 +0000

Buffet’s “strategery” is almost certainly evergy related and very forward thinking IMHO. Rail beats trucking hands-down for fuel efficient shipping, with coal playing maybe a small role. But with peak-oil on the horizon (if not just over the next rise) it also may be an entre into high-speed passenger rail service being boosted now nationally. Buffet may be privy to Stimulus 2.0 now in beta, (imminent given ongoing unemployment issues) which could well put huge emphasis on homegrown rail infrastructure investment. Very, very smart—maybe better than a gold mine!

By: tradeking13

tradeking13 — Tue, 03 Nov 2009 16:43:29 +0000

He was also buying USG at $45-50 in late-2006/early-2007 and people were touting this as a call on a housing recovery.

By: TPC

TPC — Tue, 03 Nov 2009 16:28:03 +0000

It’s odd. We’re moving into a clean energy world and Buffett makes this huge bet on a coal company. I just don’t see the overall logic on this takeover.

By: AWF

AWF — Tue, 03 Nov 2009 16:25:53 +0000

I agree TPC

Un-Buffett like buying–But why now?

Is Senility setting in ?

Or is this an energy play–inquiring minds want to know

Consider this:

The Rails are the cheapest form of transport for goods.

Diesel inventory at all time highs– could be betting on lower Diesel prices in the future–a key componet of Rail earnings.

BNI is a primary transporter of Coal–
Does Buffett know something about “Clean Coal” technology?

How about LNG transport–BNI home is in “Dallas/Ft-Worth” Texas.

I have to believe this is more than an ” All in Bet” on the US economy.

If you believe in the ” All in Bet” then senility has set in!

By: TPC

TPC — Tue, 03 Nov 2009 16:22:19 +0000

Oh God. Don’t even get me started on the monumental catastrophe Eddie Lampert is pulling off at Sears. At least Buffett isn’t planning on driving the trains as Lampert would insist on….