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Buffett bets on U.S. economy with Burlington buy
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AP Photo/Nati Harnik, file
Legendary investor Warren Buffett announced today that Berkshire Hathaway (BRKA) will acquire all the shares of Burlington Northern Santa Fe (BNI) that it does not already own, suggesting that the legendary investor, who talked as recently as July about the possible need for a second stimulus bill, may have shifted gears on his views about the economy.
Buffett's Berkshire Hathaway will purchase the 77% of the shares it does not already own for $100 in stock and cash, or about a 31% premium over yesterday's close.
“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” Berkshire's chairman and CEO said. “Conversely, America must grow and prosper for railroads to do well.
“Most important of all, however, it’s an all-in wager on the economic future of the United States. I love these bets.”
Buffet is right. Typically, transportation companies prosper during good times as consumers demand more goods and come under pressure during recessions when demand wanes. The bet on Burlington is a clear indication that the "Oracle of Omaha" expects the U.S. economy to recover in the coming years.
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