Without fear of an economic crisis Warren Buffett saw a diamond in the rough company Burlington Northern Santa Fe (BSNF), so he did what he does best and invested in the last 77.4% of the Railroad Company he didn’t already own at $26 billion on February 12, 2010. What captivated him most about the sale was not only its price tag or revenue, but the fact that he knew clearly the sheer importance of the railroads in America.
“If America’s economy prospered then so would the business” Mr. Buffett stated. A huge benefit from having railroads in America helps to fight global warming! Not only is it far more efficient and environmentally friendly, railroads can move 470 miles per gallon replacing 280 trucks on the roads. The BNSF is one of the largest freight railroad networks in North America.
Although Warren Buffett’s Railroad is very capital intensive its goal is to bring goods to over 32,500 miles of track spread out across 28 states in the US, and offers 44,000+ jobs. Amongst hauling bulk cargo like coal that generates about 10% of the electricity produced in the United States the possibilities were endless. The railroads brought: grain, chemicals, forest products, metals, minerals, consumer goods, and automobile. The BNSF had 8,000 locomotives under its name to carry these goods!
With the sale of Mr. Buffett’s former railroad companies Union Pacific (UNP) and Norfolk Southern (NSC) in 2009 this epic buy totaling at $44 billion becoming the largest acquisition in Berkshire Hathaway’s history possible. With population growing in the west at the time the railroad flourished by an increase in 30% to total $3.8 billion! Mr. Buffett knew that railroads have been here for centuries and with this investment the BNSF would be around for 100 or even 200 more years.