Burlington Northern shares are picking up speed on Wall Street, after Warren Buffett added to his stake. A filing with the SEC late last night reveals that Berkshire Hathaway bought 1.62 million shares of the railroad between last Friday (August 3) and yesterday (August 7). During that time, the market price ranged from a high of $82.27 on Friday to a low of $78.79, also on Friday. The stock closed Friday with a loss of over three dollars a share, which works out to almost 4%.
Buffett didn't quite get the low, but he did pretty well. According to the filing, he bought 1,133,600 shares at $80.40 on Friday, another 424,300 shares at $79.45 on Monday, and topped it off with 62,400 shares at $79.78 on Tuesday.
The additional shares increase Buffett's stake to 40.65 million shares, which accounts for about 11.5% of the company. The purchases increase his holdings in Burlington by just over 4% from the 39 million shares he disclosed in April.
In May, Berkshire said it owned stakes in two other railroads: Union Pacific (10.5 million shares) and Norfolk Southern (6.4 million) .
An AP story recalls Buffett and Berkshire Vice Chairman Charlie Munger saying in May that they had been slow to get aboard railroads stocks due to the industry's dismal record, but that the rail companies had become more competitive in recent years.
Fast Money's Guy Adami blogs today on Minyanville that despite Buffett's Burlington buy, he's "not convinced that the rails are the play." But, he continues, "If Mr. Buffett's hunch about the railroads are correct then increased cash flow should lead to reinvestment into the business in the form of maintenance, upgrades and new locomotives."
That leads him to Wabtec as a "stock to watch." The Pennsylvania-based company makes a "broadrange of products for locomotives, freight cars and passenger transit vehicles" and thus would benefit from the healthier rail industry Buffett apparently sees coming.
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