Last month when we looked at the investments and other activities of Warren Buffett’s Berkshire Hathaway, there were two unidentified holdings in which the company was building a position.
The list was of investments with a market value greater than $US700 million.
He told shareholders in his letter the two exceptions had a combined market value of $US1.9 billion but he didn’t disclose their names “because we continue to buy them. I could of course, tell you their names. But then I would have to kill you.”
Late last week Berkshire revealed it had built a 10.9 per cent stake in that most unfashionable of companies, the huge Burlington Northern Sante Fe railway and transport company (BNI) which now had a market value of $US 3.2 billion.
Berkshire says it now owns 39 million shares of the second-largest US railroad as of April 5.
The deal has surprised analysts who point out that the US railroad industry is fully priced at the moment with good operating margins and high valuations by investors.
Buffett’s stock purchases make him the largest shareholder, ahead of Marsico Capital Management LLC, which owned 32 million shares for an 8.9 percent stake in December.
US brokers said Berkshire would have had to disclose the rail stake upon exceeding a 5 per cent threshold if Buffett was purchasing the Burlington Northern shares with the intent of making a takeover bid, seeking a board seat, or otherwise influencing management.
But passive investors can wait until the end of the year to report 5 per cent holdings, but investors do have to file with the SEC within 10 days of reaching or exceeding a 10 per cent stake.
According to the filing, Buffett paid $US81.18 to $US81.80 in three transactions on April 4 and April 5. Burlington Northern closed at $US 82.72, on April 5.
Burlington Northern has more than 51 thousand kilometres of track in the US, shifting millions of tonnes a year of coal, grain and general freight. It is the second largest US rail group behind Union Pacific Corp.
In its 2006 annual report Berkshire listed its five-largest holdings as USG Corp, Washington Post Co, Moody’s Corp, White Mountains Insurance Group Ltd. and American Express Co.
