Revisiting Burlington Northern’s Plans for Capex

As we discussed last week in our coverage of Berkshire Hathaway’s second quarter results, the company’s newly acquired railroad subsidiary posted improved results for the quarter. Burlington Northern Santa Fe posted net earnings of $603 million on revenues of $4,094 million. Since the consolidation of Burlington Northern at the close of the acquisition on February 12, 2010, the company has posted net earnings of $885 million on revenues of $6,167 million. In this article, we will focus on Burlington Northern’s somewhat surprising $250 million dividend payment to Berkshire Hathaway in the second quarter and what meaning this has, if any, on plans for future capital expenditures.

High Speed Rail May Threaten Freight Rail Renaissance

There is little doubt that Amtrak’s Acela represents a very attractive way to travel between Washington D.C. and New York City. Leaving Washington D.C. a very short distance from the United States Capitol, one can arrive at Penn Station in midtown Manhattan in roughly two hours and forty five minutes. While catching a flight between Washington and New York is a viable alternative, it is necessary to leave the city center to reach the airport. Combined with security procedures, it can easily take longer to travel between central locations in the two cities by air compared to the speed offered by America’s version of “high speed rail”. Read this article for more details on potential conflicts between high speed rail and America’s freight railroads.

Burlington Northern’s CEO Plans for Accelerated Capex

Burlington Northern’s CEO Plans for Accelerated Capex

Over the past several months, many Berkshire Hathaway shareholders have been thinking about the company’s strategy for Burlington Northern Santa Fe which was acquired on February 12. Is it a “crazy deal” as Columbia University Professor Bruce Greenwald has claimed? Or is it a “heck of an investment” as Fairholme Fund’s Bruce Berkowitz claims? The answer ultimately comes down to deployment of free cash flow. Read this article for more details.


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