Buffett Confirms He Bought Burlington Northern (BNI) As a Hedge Against Inflation
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Warren Buffett, in an interview with Fox Business Network this afternoon about Burlington Northern (NYSE: BNI), confirmed what we suggested earlier - that he bought the company in part as a hedge against inflation.
Here is what Buffett said on Fox Business Network:
"I'd be more worried holding cash... The one thing about those unprecedented after effects is they're going to be very bad for cash. I would much rather own working assets that have cash in a period that could become inflationary down the road."
Here is the entire transcript of Liz Claman's interview with Warren Buffett on Fox Business Network:
On when he sees the economic recovery taking hold:
“I don’t know, but it doesn’t really make any difference in terms of this acquisition. If we’re going to hold something for a hundred years, the next week or month or year really doesn’t make a difference…We’re in for keeps.”
On how the deal came about:
“I said Matt, if you’re ever looking for a home for the railroad, Berkshire would make a good one. He didn’t throw me out of the office, so the next day I made him an offer… The rest is history.”
“If we hadn’t scheduled the meeting down there [in Ft. Worth], it probably wouldn’t have happened—at least it wouldn’t have happened now.”
On his support of President Obama:
“I am very, very glad I worked for and voted for president Obama and he’s the right man for the job. “
On why he didn’t use all cash for this deal:
“I like to have a very comfortable level of cash. This is also the minimum amount of stock we can give and still have people be able to elect a tax-free deal that owns BNSF stock currently. I don’t like using stock, I can tell you that. I don’t like issuing Berkshire shares.”
On the possibility of railroads being reregulated:
“The deregulation that took place starting in 1980 has actually benefited the shippers enormously and we’re moving far, far more freight with using far less fuel, very efficiently. My guess is that people will see the rail for what they are—really an outstanding way of moving freight around the country.”
On whether he is nervous making a purchase like this when there might be ramifications from all of the government spending:
“I’d be more worried holding cash… The one thing about those unprecedented after effects is they’re going to be very bad for cash. I would much rather own working assets that have cash in a period that could become inflationary down the road.”
On healthcare reform:
“I think that it’s long past the time we tackle health care… I think the wealthy overall should be taxed more than the poor or middle class.”
“I think that the wealthy have had their share of overall taxes, counting payroll taxes diminish significantly in the last 20 years. So I think that if you're looking for more revenue from the citizenry, I think the rich are the place to look.”
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