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Moneycontrol.com >> Messageboard >> General >> Business Talk >> BUFFETT DEAL
   You are here :     Moneycontrol     MMB    General      Business Talk                         Most active discussions of 2006 , 2007 & 2008
BUFFETT DEAL (2)   04-Nov-09 21:59Track this thread   Tracked by (0)  
Posted by:   brainchild on ( 04-Nov-09 21:59 )
Addressed to  Callahan,  K.N.Pillai16968,  harshadketan,  chief_kamani,  netdo,  pitquote,  genghiskhan,  investor11,  pss5588,  radhika_nandlal,  rajesh chhabria,  robin_gupta35,  aamaadmi,  Varner,  tara23,  xyz_indian
While some investors may still be sitting on the fence, the one investor who`s making full use of the current market conditions is the Oracle of Omaha, Warren Buffett. In a deal that could make its earlier investments in securities of companies like Goldman Sachs and GE look like peanuts, his cola to insurance conglomerate Berkshire Hathaway has decided to fork out a massive US$ 44 bn to buy the US rail road giant Burlington Northern Santa Fe Corp. This also makes it his biggest deal so far, trouncing the US$ 22 bn purchase of General Re back in 1998. It should be noted that Buffett already owns a small stake in the company. Indeed, as he himself described, the deal is an all-in wager on economic future of the United States.

For a man who wouldn`t touch anything that does not have a sustainable competitive advantage, the rail road giant must surely be having something going for it. And if we were to follow his earlier rationale of buying a part stake in the rail road giant back then, he had mentioned that trains had started to become more competitive against trucks in the backdrop of higher fuel prices. Also, since it is very difficult right now for a new entrant to build railroads, the incumbent players can have all the market to themselves. Hmm, now that`s some long-term moat, isn`t it? Investors could do well to remember the master`s recent advice that equities will outperform cash over the next decade, probably by a substantial degree. Thus, while Buffett seems to be following it to the tee, investors in India will not do badly either by investing in stocks with good long-term fundamentals and available at attractive prices.
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