They are accessible in the “SEC Filings” section below. This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. CSX's primary competitor is Norfolk Southern. Railroad covering western two-thirds of U.S. Canadian and U.S. railroad through Chicago to New Orleans and Iowa, Makes locomotives, freight car products, brakes, and signaling and train control equipment. Riot Blockchain Vs Bitcoin: Which Is Best. Daily Pre-Market Movers . In common with Wabtec, Trinity decided to double down on the railroad industry when it spun off its infrastructure-related business, now listed as Arcosa, in late 2018, leaving Trinity as a pure-play railroad company. For one thing, scale matters in this industry. BNSF trains traveled over 169 million miles (272 million km) in 2010, more than any other North Americ… Suppliers Performance . I'm a firm believer that there is something noble about the industrial sector. In a sign of how PSR reduces capacity, Norfolk Southern adopted a three-year plan to cut its number of employees from around 26,662 to 23,600. The author has no position in any of the stocks mentioned. A diversified conglomerate; owner of BNSF, a railroad focused on the western two-thirds of the U.S. Makes rail locomotives; part of much larger construction, mining and oil, and gas machinery company. This is the easy bit. Even in May 2020, when much of the economy struggled with the COVID-19 pandemic, Berkshire Hathaway had $137 billion in cash. Warren Buffett, the billionaire owner of Berkshire Hathaway and one of the most successful investors alive, owns BNSF Railway Company. Its key customers include railroads like BNSF, Union Pacific, and Canadian National. Burlington Northern Santa Fe Railroad (BNSF), owned by President Obama-backer Warren Buffett, would lose billions of dollars in oil freight if the Keystone XL Pipeline were approved. It also gives Buffett opportunities to make his other investments more valuable. Perhaps he doesn’t want to buy a railway that will compete with BNSF. The importance of railroads hasn’t gone unnoticed by some of the world’s top investors. Instead, he takes a long-term perspective that involves purchasing a company and improving its performance over the years. How to Buy Railroad Stock . That's a difficult scenario for railroad equipment suppliers. The purchase had a value of about $44 billion, making it the largest acquisition in Warren Buffett’s career. Consequently, management decided to follow CSX in adopting a PSR-based operating plan in late 2018. The railroad sector offers retail investors the relative security of being in a historically important industry that is vital to the U.S. economy. Then again, he could have preferred BNSF because of its lower purchase price. The initial impact on its operating ratio has already been outlined in this article -- see charts above -- and management has already generated significant productivity improvements, shown in metrics such as train velocity and terminal car dwell. That's the basic business of the railroads, and it's fair to say that their revenues, by and large, follow the cyclicality of the economy. They are categorized as Class I railroads by the Surface Transportation Board (STB), and they account for the majority of freight rail activity in the U.S. By purchasing BNSF, Berkshire Hathaway got a longer railway at less than half the price of Union Pacific. After all, the #1 stock is the cream of the crop, even when markets crash. Together, these seven railroads generate more than $90 billion in annual revenue. Follow me on Twitter to receive quick and thorough analysis of your favorite stocks. Figures represent operating ratio in the year before his tenure as CEO compared to last year of tenure. The railroad's Kansas City Southern de Mexico "has the right to operate approximately 3,300 route miles, but does not own the land, roadway, or associated structures, and additionally has approximately 550 miles of trackage rights," according to company reports. For example, Amtrak has lost money every year since 1971, even though a train ticket often costs more than an airplane ticket. The claim that BNSF owns all the railroad lines that connect the United States to western Canada is false. As you can see above, its operating ratio tends to be lower than its rival's, and it also tends to be a better cash generator -- something that will improve dramatically as PSR cuts capital expenditure requirements. Trailing 12-month revenue. Down the road, hopefully the new stock symbol re-emerges as BNSF or something totally different. Not only based in the same country but also sharing a CEO in common (Hunter Harrison), the two Canadian railroads also have major operations in the U.S. Operating under the name of Grand Trunk in the U.S., Canadian National is roughly double the size of its compatriot Canadian Pacific (known as Soo Line Railroad Company) in the U.S. Which Railroad Does Warren Buffett Own? The stock shot up over 28 percent Tuesday, to $97.66 in afternoon trading. They are regulated by the STB and are obliged to file "annual and periodic financial and statistical reports," according to the organization. Given their relative underexposure to coal, the two will be attractive for investors looking to avoid coal, but the fact that both railroads have utilized PSR for some time means that improving their operating ratios will be relatively harder in the future. The Burlington Northern Santa Fe (BNSF) Railway Company (reporting mark BNSF) is the largest freight railroad network in North America. Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer. Berkshire Hathaway has a huge amount of cash that lets it invest in practically any business. In addition, the railroad operates extensively in Mexico. As such, there isn't a case for buying Kansas City Southern stock if you don't believe in the future of U.S./Mexico trade. Bnsf Railway Co Reports on Competition. There will be more to say about this chart later, but for now, note how the Canadian railroads gradually improved under PSR, and note how well CSX did after beginning adoption in 2017. The larger size may help explain why Warren Buffett chose to purchase BNSF over Union Pacific. When it comes to length, though, BNSF manages to beat Union Pacific. So investors can expect a multiyear effort to lower its operating ratio, which, as you can see in the chart above, starts at a relatively high level. 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