Warren Buffett's stake in Burlington Northern Santa Fe has reached 22.4 percent, with a new options-related stock purchase of over two million shares.
In an SEC filing last night, Buffett's Berkshire Hathaway says it bought 2,325,000 shares of the freight railroad for $75 each last Friday, January 30. That's a total of $174.4 million.
Burlington Northern closed at $66.25 on that day, but Berkshire didn't buy the shares on the open market.
The Burlington purchase is the result of put options sold by Berkshire on December 3. On that day, the railroad's closed at $77.50.
In exchange for $14.8 million up front, Berkshire agreed to buy the 2.3 million Burlington shares at $75 each at the end of January. The buyer was paying for a form of insurance. In exchange for the premium of almost $15 million, the buyer of the options got protection against Burlington's shares falling below $75, which they have. If the stock had stayed above $75, the holder of the options would not have exercised them and held onto the stock instead.