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post #1 of 24 (permalink) Old 11-03-2009, 06:10 PM Thread Starter
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Shit just got real...

If your a railroad executive. You might be looking for a new line of work.


Looks like Warren Buffet likes the nations railroads so much he's decided to fork over 34 billion just so he could have the privilage of owning one. I hope it's good for the industry and he shakes it up for the good. For the past two decades the nations railroads have been plagued with management that is fresh out of college and couldn't tell the differenct between an autorack and a boxcar. I hope he cleans house and promotes guys that actually know how to run a railroad. For the past 10 years management has spent billions trying to save pennies while trying to prove the unions wrong. I've been telling you guys for the past 2 years to buy railroad stock especially since it's been so cheap during this recession. BNSF stock shot up almost $21 on this news alone.

http://news.yahoo.com/s/ap/20091103/...ngton_northern

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

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post #2 of 24 (permalink) Old 11-03-2009, 06:21 PM
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You can bet he will clean house.
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post #3 of 24 (permalink) Old 11-03-2009, 06:24 PM
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What's the difference between an autorack and a boxcar?
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post #4 of 24 (permalink) Old 11-03-2009, 06:35 PM
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What's the difference between an autorack and a boxcar?
You've got upper management written all over you.
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post #5 of 24 (permalink) Old 11-03-2009, 10:22 PM Thread Starter
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The funniest part is that BNSF played right into Buffet's plan of him taking the company over. Over the last few years it was no secret he had been buying large amounts of BNSF stock. During this same time BNSF was very aggresive at buying back their own stock. This move by BNSF did nothing but increase Buffets stake in the railroad without him actually having to buy anymore stock. BNSF actually made it cheaper for him to take them over lol. That just shows what kind of management they have in place. Also the managment team on BNSF has trippled in size over the last 10 years. They have layers upon layers of worthless management in place that can't justify their jobs if their lives were at stake. Rumor has it the new owner of BNSF is going to clean house rather quickly.

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

Don't cupple up without protection.
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post #6 of 24 (permalink) Old 11-03-2009, 10:33 PM
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sweet, maybe it will be easier to get on with them now
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post #7 of 24 (permalink) Old 11-03-2009, 10:49 PM
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If Im not mistaken the TRRC still controls and sets rules for oil/gas leases and drilling guidelines right?

CANADIANS = DOUCHERS

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post #8 of 24 (permalink) Old 11-04-2009, 02:30 PM
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I'm glad he overpaid. He gave me a chance to short UNP after it crossed below its 50-day moving average @ 60.25.

Looking for it to fill the gap back in the 55s.

Just because Buffet overpaid doesn't mean there is some new reality to the American economy. Buffet is looking decades out and traders bought into UNP thinking there was some type of short term play in railroads.

I love the stock market.

My 401K is now a 400K (was 301K)
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post #9 of 24 (permalink) Old 11-04-2009, 02:40 PM
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Originally Posted by 01WhiteCobra View Post
I'm glad he overpaid. He gave me a chance to short UNP after it crossed below its 50-day moving average @ 60.25.

Looking for it to fill the gap back in the 55s.

Just because Buffet overpaid doesn't mean there is some new reality to the American economy. Buffet is looking decades out and traders bought into UNP thinking there was some type of short term play in railroads.

I love the stock market.
I have a feeling that some of these assholes even tried to buy the Reading, B&O, the Short Line and the Pennsylvania railroads. Railroads are HOT man!!!!
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post #10 of 24 (permalink) Old 11-04-2009, 03:50 PM
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Originally Posted by Trip McNeely View Post
If Im not mistaken the TRRC still controls and sets rules for oil/gas leases and drilling guidelines right?
Correct, the Railroad Commission oversees all of the wells in Texas.

Buell 1125R
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No fast cars though
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post #11 of 24 (permalink) Old 11-04-2009, 04:00 PM
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This god damn market makes me sick sometimes. Oh noes, the Fed says rates will stay low, we better sell. Clowns.
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post #12 of 24 (permalink) Old 11-04-2009, 04:19 PM
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Originally Posted by 01WhiteCobra View Post
I'm glad he overpaid. He gave me a chance to short UNP after it crossed below its 50-day moving average @ 60.25.

Looking for it to fill the gap back in the 55s.

Just because Buffet overpaid doesn't mean there is some new reality to the American economy. Buffet is looking decades out and traders bought into UNP thinking there was some type of short term play in railroads.

I love the stock market.
I know you rely on stats to make buying and selling decisions but do you ever look at what the company does and what the outlook is for growth? If so how much does that play into your decisions? Ever go with your gut on anything?
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post #13 of 24 (permalink) Old 11-04-2009, 04:26 PM
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A buddy of mine is a conductor. What's this mean for him?
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post #14 of 24 (permalink) Old 11-04-2009, 05:36 PM
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I know you rely on stats to make buying and selling decisions but do you ever look at what the company does and what the outlook is for growth? If so how much does that play into your decisions? Ever go with your gut on anything?
Only company growth and outlook I care about is my company's.

It is just a different style of trading. Doing it this way I can look through 100s of charts a night compared to researching one company.

Depends on what you enjoy doing really. Some people would shoot themselves in the head looking at charts all night. Others would shoot themselves in the head analyzing return on capital, debt ratios, earnings growth, etc.

I'm probably a closet ADD person so being able to flip through charts looking at most charts for a second before moving on to one I find interesting suits my personality.

My 401K is now a 400K (was 301K)
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post #15 of 24 (permalink) Old 11-04-2009, 10:10 PM Thread Starter
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A buddy of mine is a conductor. What's this mean for him?
Not much if anything will change for him. It's his 30 local boss' that will be seeing the change.

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

Don't cupple up without protection.
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post #16 of 24 (permalink) Old 11-04-2009, 10:29 PM Thread Starter
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Originally Posted by 01WhiteCobra View Post
I'm glad he overpaid. He gave me a chance to short UNP after it crossed below its 50-day moving average @ 60.25.

Looking for it to fill the gap back in the 55s.

Just because Buffet overpaid doesn't mean there is some new reality to the American economy. Buffet is looking decades out and traders bought into UNP thinking there was some type of short term play in railroads.

I love the stock market.
I'm not going to start a pissing match, but alot of experts and people in the know think he got a deal. Rails' stock prices have been dragged down just like everything else due to the economy for no fault of their own. You surely couldn't build a railroad the size of BNSF for 34 billion. Thats for damn sure.

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

Don't cupple up without protection.
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post #17 of 24 (permalink) Old 11-05-2009, 07:21 AM
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I have a feeling that some of these assholes even tried to buy the Reading, B&O, the Short Line and the Pennsylvania railroads. Railroads are HOT man!!!!
I'll trade you two of them for Boardwalk. I needz some hotels!


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post #18 of 24 (permalink) Old 11-05-2009, 07:37 AM
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I have a feeling that some of these assholes even tried to buy the Reading, B&O, the Short Line and the Pennsylvania railroads. Railroads are HOT man!!!!
As long as I still have Park Place, it's smooth sailing for me. Ima make it rain paper moneys, bish!

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post #19 of 24 (permalink) Old 11-05-2009, 09:20 AM
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Originally Posted by FreightTrain View Post
I'm not going to start a pissing match, but alot of experts and people in the know think he got a deal. Rails' stock prices have been dragged down just like everything else due to the economy for no fault of their own. You surely couldn't build a railroad the size of BNSF for 34 billion. Thats for damn sure.
LOL.

Railroads are a spotty return at best. Buffet split his B shares 50 to 1 to pay for the transaction (totally going against his previous actions) and he has materially depleted Berkshire's cash stores and the purchase was very un-Graham like.

With to 50-1 stock split of the B and a potential add to the S&P 500 investors (professional) will value Berkshire like it should... a closed end fund which you buy at a discount to its intrinsic value.

Do the experts and people "in the know" running 1-900 psychic lines? Because Buffet paid a significant premium to the current share price and it is his largest and most riskiest bet to date.

Fact of the matter is I think this was more of a bet against inflation than the restoration of America. Inflation has been a major concern of his for over a year now. Railroads are one of the few industries which don't lose their pricing power during a recession. As the dollar continues to deflate (my bet) then commodities continue to rise and Buffet plays middle man to the commodities game.

The purchase is a departure from Buffet's normal avoidance of businesses that require large capital investments. So, again, it begs the question, why?

Rumor is a second round of stimulus money is in the works and the rails will get a decent chunk. More stimulus money, more inflation. It is no secret that Buffet is a confidant to the President. Are we going to be helping Buffet with his investment?

So, it is very possible Buffet purchases an investment which doesn't lose its pricing power during down turns and he'll have the taxpayers help him with his capital investments in order to stabilize the investment. I'd make that bet as well if I had the cash. Buffet being Buffet is a great PR person and he can spin it anyway and make the masses believe it. But this deal only makes sense if it was a play on inflation and not a play on an economic recovery.

I will admit that BNI is the best of the group and Buffet did practice his strategy in this case. The rest are crap.

As far as helping you union boys... who said this?

Quote:
Organized labor and their ability to extort monies, lobby government politicians, change laws in their favor and institute additional regulations to propel their will over what's best for our nation, and our citizenry is getting close to Treasoness. The barriers to entry put forth thru Unions, and their political influences are why we have less competition in free-markets, drive gas guzzling cars, and shelve much of the innovation and technology in our nation.

My 401K is now a 400K (was 301K)
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post #20 of 24 (permalink) Old 11-05-2009, 10:23 PM Thread Starter
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01Whitecobra,

We both know that Buffet isn't a pump and dump guy like the rest of wall street. Thats why he wasn't caught up in the dot com boom and bust. He refuses to buy companies or stock that have no real value and he also invest in the long term. Only a fool would say Railroads aren't a sure bet over the next 10,20, or 30 years. With the rising cost of energy and the green innovations taking hold in America, Railroads are set to prosper. With shipping numbers expected to double in the next 15 to 20 years you surely don't think all those goods are going to be shipped by truck on our Nations already congested highways do you?

Why do you think he over paid? Is it because he gave a 22% premium over the current stock price. I doubt BNSF would have sold the company at it's pre Buffet offer stock price anyways. They themselves know their stock was under valued and where buying it back as fast as they could. Rails have traded well above the $100 range with in the last 2years. UNP was in the $150 range before a stock split and before the recession. To think that Rails can't return to those levels in the next 5 years is a bit out of reach.

You also have to add in the Trifecta effect when you try to understand why Buffet bought BNSF. Buffet owns several power plants, large shares of UPS, Coca Cola, Johnson and Johnson, Kraft Foods, and Conoco Philips, all of which rely heavily on Railroad Transportation. By buying BNSF he essentially bought his way into the transportation industry and he is now the middle man to all the other companies he already has ownership in.

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

Don't cupple up without protection.
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post #21 of 24 (permalink) Old 11-09-2009, 06:01 PM
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Freighttrain, I admire your simplistic view of capitalism and the American economy. I wish I wasn't a thinking person and I could just go along my merry way with a dumb old smile on my face thinking life is great.

You are correct the Oracle of Omaha is a masterful allocator of capital. He also doesn't pump and dump (although he did a great job for the rest of the RRs and I think we witnessed the top in RRs be put in about 2pm today... right before the press release saying he was selling off all his other stakes in RRs. Nice dump for the RRs afterwards. I wonder if that was before or after he liquidated his positions?)

But, I also Buffet could give two shits about you or I (regardless of his good ol' boy demeanor.)

Lets look at his financial company holdings. Goldman Sachs, Wells Fargo, American Express, General Electric, US Bancorp, M&T, BOA, Sun Trust.

All together there is about a 26 billion dollar investment from BRK. These holdings have received over 95 billion in TARP money and over 133 billion in government guaranteed debt (of which amounts to over 75% of all the debt since the guarantee was launched.)

Without the guarantee... Goldman Sachs would have failed along with many on the list of BRK holdings. Without these gaurantees these financial institutions would have had to recapitalize. If the institutions could not finance their balance sheets the losses would have totally wiped out shareholder equity (and about 26 billion in investment from BRK.)

He traded the bailout. You and I are funding the richest man in America.

Buffet had the opportunity to set a correct course for this country and instead he wasted his political capital to protect his own assets.

So, excuse me, if the shine has worn off Buffet for me. But, I'm sure he'll be there with arms wide open during the next round of bailouts which will include the railroads (although... like you said, y'all are doing great, why the need for bailout?)

My 401K is now a 400K (was 301K)
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post #22 of 24 (permalink) Old 11-10-2009, 02:24 AM Thread Starter
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01WhiteCobra,

Like I said I didn't want to start a pissing match and I understand you always feel the need to throw in a few witty jabs so I can live with that. But you side step my points and bring up your own that are totally off the radar.

To address your point of Buffett dumping his other RR stocks:

Come on really. Any monday morning quarter back trader worth his salt knew that the Feds would never ok Buffet buying BNSF unless he sold off his entire interest in other Rails first. The Government hates competition and no one, but them is allowed to have a monopoly. So anyone that acts suprised that he sold his holdings in other Railroads is retarded.

You mentioned Buffets holdings of Goldman Sachs, Wells Fargo, American Express, General Electric, US Bancorp, M&T, BOA, Sun Trust, but you failed to mention that Buffett owned large shares of these companies before the bailout. The reason being, He believes in America and American Companies.

Please inform the rest of us on DFWstangs why you think Railroads will be the next industry to get bailed out. I've said in the past that we've weathered the storm and taken our licks, but we are moving along just fine compared to other industries. Shipping rates are down 15 to 30% year over year, but they have been inching up week by week for the last 2 months. The Railroads have had to make cuts that were quick and painful, but they did so to right the ship. During the worst recession in recent history the two biggest players in the Railroad industry have managed to scrape out a combined profit in 08 of about 4.5 billion. Not to shabby if you ask me.

TRAIN TRASH it's like WHITE TRASH but with money.

My other vehicle is a Locomotive.

Don't cupple up without protection.
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post #23 of 24 (permalink) Old 11-10-2009, 07:19 AM
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Freight it isn't a pissing match because you aren't pissing.

Buffet was under no obligation, legally, to sell his interest in the other railroads.

You actually made my point when you discuss his financial holdings. This isn't free market capitalism it is crony capitalism. He had the majority of these holdings prior to fact that 75% of the debt now owed by these companies are backed by you and I.

I also find it hilarious for anyone to defend him since he lobbied for the bailouts while holding a major stake in Moody's which is at the center of the CDO scandal with their bogus credit ratings.

While he was a major shareholder in these companies... Wells Fargo had a huge toxic holding of home equity loans, GE Capital's balance sheet was atrocious, BOA did a really silly acquisition of Country Wide and Merrill Lynch, Goldman had trading practices that defied any sense of fiscal responsibility and American Express was charge-off debt faster than a lap at a Nascar event.

Both of the morons running for President in 2008 considered him for treasury secretary and he was lobbying for bailouts of his holdings while adding to his holdings at these companies. 30% of BRK's portfolio received TARP funds!

He sat there and decried derivatives as financial "weapons of mass destruction" while BRK issues billions upon billions of them (the same kind that sunk AIG.)

I find it hilarious in this country that despite the banking collapse in this country, financial leaders such as Buffet still have surprising control over this country. We, for some reason, believe "Wall Stree knows best" and defer to them way too much. And yes... Buffet is Wall Street. He may own a candy store and a jewelry store and now a railroad but these are more like toys of a 6 year old to him.

He is a Wall Street man pure and simple with full faith and backing of the US taxpayers in this country. While his holdings have increased in value from the bailouts we're stuck paying for it.

Gotta love America. Little cash and a little influence is definitely the American way and people like you freight just buy it hook line and sinker.

My 401K is now a 400K (was 301K)
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post #24 of 24 (permalink) Old 11-10-2009, 08:03 AM
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More pearls of wisdom from the Oracle Of Omaha:

Quote:
"It's infuriating - I can speak more about the American public - but it's infuriating to people to see their friends losing their jobs. In terms of seeing their friends having their homes foreclosed upon, whatever it may be. And, nobody going to jail. It was one thing in Enron. At least you had (Jeffrey) Skilling and Ken Lay, or WorldCom or those things. Society at least felt there was a little bit of vengeance taking place. (Laughs.) But here nobody's going to jail. In fact, a lot of them are walking off with tons of money which they got, in many cases, with preferential tax terms. So the American public's exasperation of this is very understandable...

On the other hand, I will say this. Last September and October our public officials, the key ones, particularly (Federal Reserve) Chairman Bernanke but (Treasury) Secretary Paulson, too, what they did was absolutely essential to the system even surviving." (read: They did everything to save my ass! What two wonderful people!)
Including you Buffet.

My 401K is now a 400K (was 301K)
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