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Warren Buffett's Berkshire Hathaway Still Riding the Rails with $800 Million Stock Buy

Monday, 27 Aug 2007 | 7:47 PM ET

For the third time this month, Warren Buffett's Berkshire Hathaway holding company has reported boosting its stake in the freight railroad Burlington Northern, more evidence that Mr. Buffett sees the stock as undervalued. And this third round of purchases is much bigger than the previous two.

In an SEC filing a short time ago, Berkshire reveals that it bought a total of 10.1 million shares at an average price of $79.98 between last Thursday and today:

  • Thursday, August 23: 4,319,500 shares at $79.96
  • Friday, August 24: 2,439,100 shares at $79.97
  • Monday, August 27: 3,322,170 shares at $80.00

The additional shares put Buffett's total stake at 14.8 percent of the company.

Back on August 17, Berkshire reported buying 1.4 million shares and on August 7 Berkshire said it picked up 1.6 million shares.

After both filings, rail stocks rallied on the implicit endorsement from Mr. Buffett.

The railroad purchases come amid speculation that Mr. Buffett might buy into the troubled mortgage lender Countrywide. (Remember, Mr. Buffett told our Becky Quick that all the speculation is just ...speculation.) So far, there's no indication he's made any kind of move regarding Countrywide, although we wouldn't necessarily know if he has done anything on that front. Mr. Buffett is required to reveal his Burlington moves only because he owns more than 10% of the company. (Frankly, after reading the New York Times piece Sunday on Countrywide lending practices, I wonder if Mr. Buffett would want to get involved with the company.)

Keep an eye on the rail stocks tomorrow (Tuesday.)

Here are the latest real-time quotes:

Questions? Comments? Email me at buffettwatch@cnbc.com

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