The Hidden Railroad Play

When Warren Buffett's Berkshire Hathaway (BRK.A) bought the Burlington Northern Santa Fe railroad a couple of years back for nearly $44 billion, which at the time was a hefty premium to the stock price, the usual criticism was let loose. Buffett's investment in a capital-intensive, low-margin business was seen as out of touch.

Fast forward to today, and railroads are booming. Thanks to stubbornly high oil prices and a slowly recovering economy, railroads are experiencing growth in freight tons hauled, and profits are soaring. Over the past couple of years, shares in railroad stocks have appreciated considerably, and if Burlington Northern were for sale today, it would probably fetch north of $60 billion, given peer valuation multiples. It's no surprise that activist investor Bill Ackman's newest activist efforts involve Canadian Pacific Railway (CP)....509 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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