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.
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?
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.