WARREN BUFFETT made his biggest bet ever — and it wasn't in a new Internet company with a goofy name or some newfangled technology.
It was in a railroad that dates back 150 years.
Today's Burlington Northern Santa Fe Corp. is the product of 390 different railroad lines that have merged or were acquired since around the Civil War.
Today the company has 220,000 freight cars chugging along 32,000 route miles, carrying consumer products, coal, industrial products like farm equipment, and corn, wheat and soybeans.
Buffett's offering price for BNSF of $34 billion (plus picking up $10 billion of the railroad's debt) would be the biggest acquisition yet by his company Berkshire Hathaway, now dominated by insurance businesses and utilities.
Like the rest of us, Buffett has had a rough time during the recession, although his insurance and utility holdings have not lost as much as other businesses.
STILL, when Buffett loses money, it's in the billions.
But Buffett's back.
Buffett said he is betting on BNSF and its management, and on the railroad industry.
"Most important of all, however, it's an all-in wager on the economic future of the United States," Buffett said. "I love these bets."
Railroads may not be the newest thing, but they do offer an economical way to move goods.
The company says that each train can move one ton of freight 423 miles on one gallon of diesel fuel, and that if 10 percent of the freight that moves by truck were put on trains, America would save a billion gallons of fuel per year.
SO HERE'S an old industry doing things better and cleaner, with good leadership.
Buffett's usual strategy is to support management he likes, and he is a big fan of Matthew K. Rose, the BNSF chief executive officer.
Buffett's investment in a business that literally moves America should give us all hope that the economy is on track.
Scripps Howard News Service
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