Warren Buffett focuses on Burlington Northern Santa Fe (BNI, Financial) these days. Whenever opportunities arise, he buys more, by selling puts and buying shares directly in open market. He just bought another 4.3 million shares of Burlington Northern Santa Fe at prices from $61.6 to $63.4 from Jan. 15 to Jan. 20, Berkshire Hathaway filing reveals.
We have reported that Warren Buffett continues to sell put options on Burlington Northern Santa Fe. This is another large chunk of buying by Buffett after the previous purchases in Oct. 2008. Now Berkshire owns more than 74 million shares of BNI, more than 21% of total shares outstanding.
Warren Buffett started buying BNI in 2007 at prices around $80/share. He continues to add shares as BNI prices lingers at around $80. He stopped buying when the prices rose above $85 in the middle of 2008. As BNI declined with the oil prices and the stock market, Buffett started buying again. He also sold puts to reduce his share prices. As of today, he still has more than 2 million shares of put options open, with exercised cost per share of $68.65. For detailed information, go to Berkshire Hathaway Makes Profit with Burlington Northern Santa Fe Options
Warren Buffett is becoming more active these days as stock market has plunged to its lowest level in about 10 years. Why is he buying stocks now? “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors,” he wrote in a New York Times article published in Oct. 2008. Buffett also said he believe over the next decade, stocks can outperform cash by a substantial degree.
GuruFocus did a study based on Warren Buffett’s evaluation method, and found that stock may return at least 8-10% over the next decade. The article was published on Oct. 21, 2008, when Dow was at 9,045. Today it finished at 8228, stocks should be poised for a bigger gain. To read the article, go to Where Are We with Market Valuations? What Can We Expect for the Next Decade?
How much is BNI worth? Our DCF calculator gives a fair value of $105.7. At today’s close of $65.59 we have a margin of safety of 38%. Considering Buffett did not buy BNI when the price climbed above $85, the fair value of $105.7 seems to be reasonable.
If we look at the historical valuations of BNI, today’s price is about 20% above historical low P/B, P/E, and P/S ratio. The historical lows of P/B and P/S ratios were reached in 2003, BNI shares quadrupled in 5 years after that. If BNI shares dropped to $50, it would reach its historical low valuations.
The good thing for our Buffett followers: at today’s price, we can buy BNI at an average cost of more than 15% below what Buffett has bought. Do you want to take this advantage?
Also check out:
We have reported that Warren Buffett continues to sell put options on Burlington Northern Santa Fe. This is another large chunk of buying by Buffett after the previous purchases in Oct. 2008. Now Berkshire owns more than 74 million shares of BNI, more than 21% of total shares outstanding.
Warren Buffett started buying BNI in 2007 at prices around $80/share. He continues to add shares as BNI prices lingers at around $80. He stopped buying when the prices rose above $85 in the middle of 2008. As BNI declined with the oil prices and the stock market, Buffett started buying again. He also sold puts to reduce his share prices. As of today, he still has more than 2 million shares of put options open, with exercised cost per share of $68.65. For detailed information, go to Berkshire Hathaway Makes Profit with Burlington Northern Santa Fe Options
Warren Buffett is becoming more active these days as stock market has plunged to its lowest level in about 10 years. Why is he buying stocks now? “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors,” he wrote in a New York Times article published in Oct. 2008. Buffett also said he believe over the next decade, stocks can outperform cash by a substantial degree.
GuruFocus did a study based on Warren Buffett’s evaluation method, and found that stock may return at least 8-10% over the next decade. The article was published on Oct. 21, 2008, when Dow was at 9,045. Today it finished at 8228, stocks should be poised for a bigger gain. To read the article, go to Where Are We with Market Valuations? What Can We Expect for the Next Decade?
How much is BNI worth? Our DCF calculator gives a fair value of $105.7. At today’s close of $65.59 we have a margin of safety of 38%. Considering Buffett did not buy BNI when the price climbed above $85, the fair value of $105.7 seems to be reasonable.
If we look at the historical valuations of BNI, today’s price is about 20% above historical low P/B, P/E, and P/S ratio. The historical lows of P/B and P/S ratios were reached in 2003, BNI shares quadrupled in 5 years after that. If BNI shares dropped to $50, it would reach its historical low valuations.
The good thing for our Buffett followers: at today’s price, we can buy BNI at an average cost of more than 15% below what Buffett has bought. Do you want to take this advantage?
Also check out:
