Berkshire Hathaway (BRK.B) has no plans to acquire another railroad, says company CEO Warren Buffett.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Speaking to CNBC, Buffett said he is not in the market to buy another train operator, but he acknowledged that he met with the CEO of railroad CSX Corp (CSX) earlier this month and discussed cooperation to make freight rail more efficient.
Buffett and his top lieutenant Greg Abel met with CSX CEO Joseph Hinrichs on Aug. 3. Buffett said he made clear to Hinrichs that Berkshire Hathaway would not make a bid for CSX, but he believed the two companies could cooperate more to gain efficiencies and market share.
Rail Consolidation
Speculation about consolidation in the railroad industry has increased after railroad operator Union Pacific (UNP) announced that it is purchasing rival Norfolk Southern (NSC) in a blockbuster $85 billion deal. Berkshire Hathaway, a holding company, owns BNSF Railway, which it purchased in 2010 and operates as a standalone subsidiary.
BNSF and Union Pacific are the two largest railroad operators in the U.S. There has been rampant speculation that Buffett would seek a merger with a smaller railroad company to counter Union Pacific as it grows through its Norfolk Southern acquisition. But Buffett has shot down those rumors.
BNSF Railway and CSX did announce a strategic partnership on Aug. 22 to provide new coast-to-coast rail services. The partnership is a way to move freight across the U.S. more efficiently without Berkshire Hathaway paying a premium to acquire CSX.
Is BRK.B Stock a Buy?
Only one analyst currently offers a rating and price target on Berkshire Hathaway’s more affordable class B stock. So instead, we’ll look at the stock’s three-month performance. As one can see in the chart below, shares of BRK.B have declined 4.51% in the last 12 weeks.
