(The following story by Gregory Richards appeared on The Virginian-Pilot website on May 17.)
NORFOLK, Va. — Shares of the country’s biggest railroads rose Wednesday, a day after Warren Buffett and two other major investors disclosed their stakes in the resurgent railroad industry.
Norfolk Southern Corp.’s stock gained 92 cents, or 1.7 percent, to close at $56.79. The stock prices of CSX Corp., Burlington Northern Santa Fe Corp. and Union Pacific Corp. increased between 0.9 and 1.4 percent.
“In addition to continued strong pricing and positive long term secular demand fundamentals, we believe the strong run for the group so far in 2007 has been driven by newfound investor interest in the railroads,” Edward Wolfe, an analyst for Bear Stearns & Co. Inc., wrote in a research note Wednesday.
On Tuesday, Buffett’s Berkshire Hathaway Inc. revealed that at the end of March it held 6.4 million shares of Norfolk Southern valued at about $322 million, giving it the ninth-largest stake in the Norfolk-based railroad. In addition, it said it owned 10.5 million shares of Union Pacific, according to regulatory filings.
The disclosures came five weeks after Buffett, the world’s second-richest man, acknowledged that his company owned stakes in three railroads but identified only one, Burlington Northern Santa Fe. That position amounted to 34.7 million shares on March 31, according to the documents filed with the Securities and Exchange Commission.
Billionaire Carl Icahn and The Children’s Investment Fund Management LLP, an activist hedge fund based in the United Kingdom, also disclosed significant stakes in the big railroads Tuesday.
Once Buffett invests in a company, its share price typically rises. The biggest lift to railroad stocks may have occurred April 9, right after Berkshire disclosed its first railroad investment. On that day, shares of all four major railroads increased in value, with Burlington Northern’s climbing the most, 6.5 percent.
Berkshire began investing in the railroads as early as the third quarter of last year, the filings show.