(The following story by Jeff Kiger appeared on The Post-Bulletin website on April 11.)
ROCHESTER, Minn. — Does the Wizard of Omaha’s ride on the rails mean DM&E’s proposed expansion plans will pick up steam, or screech to a halt?
It came out this week that Warren Buffett’s Berkshire Hathaway Inc. has picked up a 10.9 percent stake in Burlington Northern Santa Fe Corp. And Buffett’s people have confirmed that his company has acquired smaller stakes in two other rail companies.
“I have an idea what this will mean to DM&E. It is possible one of those other railroads could be DM&E,” said railroad analyst Tony Hatch on Monday afternoon. “Although I’m sure the DM&E would have announced that themselves.”
On Friday, Berkshire disclosed in a filing with the U.S. Securities and Exchange Commission that it owned 39,027,430 Burlington Northern shares, making it the largest shareholder of the Fort Worth, Texas-based company.
The market value of those shares was $3.23 billion as of April 5.
Buffett declined in a letter to investors to name the two other companies in which Berkshire owns $1.9 billion of stock “because we continue to buy them. I could, of course, tell you their names. But then I would have to kill you.”
Jim Cramer of MSNBC’s Mad Money investing show is guessing at Norfolk Southern Corp. and Union Pacific Corp., but no one knows yet.
If Buffett is not investing in DM&E, how could his spike in interest in railroads affect the proposed expansion?
“It is impossible to say,” said Hatch. “His investing in western railroads that could compete with DM&E or could buy DM&E … I don’t know if that has any impact at all.”
While Hatch couldn’t speculate on how this turn in the rails might benefit or hurt DM&E’s proposed project, he did see his own previous position supported.
“His buying at relatively high prices — almost 52-week highs — suggests he believes in, as I believe, this rail renaissance, this comeback of the railroad industry,” he said.
Buffett’s purchasing sparked a steep increase in Burlington stock as well for other railroads. Hatch advised to keep an eye on the rails.
Railroads’ comeback “is a story that has not happened yet, but is still in the early or middle innings,” he said. “There is a lot of room to continue, and I believe it will. Though will it continue via South Dakota in the Power River Basin? I don’t know.”