Thursday, May 17, 2007

Buffett, Icahn ride the rails

News out on Tuesday revealed that investors Warren Buffett and Carl Icahn were increasing their stake in railroad investments.

SEC filings from earlier in the week showed that Icahn held a 2.7 million share stake in CSX Corp, as well as a 29 percent stake in American Railcar Industries.

Meanwhile, filings from Warren Buffett's Berkshire Hathaway showed that the company had added to its rail holdings, with holdings in Union Pacific and Norfolk Southern rounding out Berkshire's recently announced stake in Burlington Northern.

More on the recently disclosed railroad investments from Bloomberg:

``The rail group has attracted a lot of attention in a year and a half that could've led to a lot of smart people looking into it,'' Tony Hatch, an independent rail analyst based in New York, said yesterday in an interview.

``This group has clearly changed in many ways and has been stronger about talking about how it's changed.''

CSX and companies such as Union Pacific Corp. and Burlington Northern Sante Fe Corp. are benefiting from a tightening in rail capacity starting in 2003 and rising Asian import volume, Hatch said. Buffett, Berkshire Hathaway's chairman, said earlier this month that higher fuel prices and deregulation are making rail carriers attractive investments.

``As oil prices go up, higher diesel fuel raises costs for rails, but it raises costs for its competitors -- truckers -- roughly by a factor of four,'' Buffett, 76, said at the company's May 5 annual meeting in Omaha, Nebraska.

See Berkshire Hathaway's recent 13F filings for latest public holdings info.