Berkshire Hathaway Case Summary

It was pretty obvious that at 79, Mr. Warren Buffett age does not affect the company’s strategic moves such as the purchase of Burlington Northern Santa Fe Railroad. This was a wise move for Mr. Buffett, which took a lot of research, and time, and knowing when to make an offer for BNSF, and what to offer. I feel that with age comes experience, and Mr. Buffet saw an opportunity and took it. BNSF was a solid investment, with real profit, cash flow and a very good future. Mr. Berkshire Hathaway’s business model was to buy large insurance companies that ensured a stabilized cash-float, but the purchase of BNSF may have seemed to differ from his usual business model, but the outcome was the same, with having a stabilized cash-float. With the oil boom and increase in agriculture, and industrial shipments, this made BNSF a perfect financial asset for Mr. Berkshire Hathaway.

What does Berkshire Hathaway’s purchase of BNSF Railroad say about where Buffett thinks the price of energy (oil and gasoline) is going to be in the future?

Mr. Buffett may have estimate that the oil price or overall energy price was going to decline, but even if it did not, BNSF still turns out to be a profitable asset for the company
BNSF moved each ton of freight it carried, a record 500 miles on a single gallon of diesel fuel. That’s three times more fuel-efficient than trucking is, which means our railroad owns an important advantage in operating costs. Our country benefits because of reduced greenhouse emissions and a much smaller need for imported oil. This is a huge plus for the lower 48 states, due to the fact that with less trucks on the road, this would mean less major repair required for our highways, and with railing shipments our society as a whole will benefit