Buffett’s Most-Watched Index Takes a Tumble: Chart of the Day
By Daniel at 10 July, 2009, 7:51 pm
July 10 (Bloomberg) — For Warren Buffett, freight-train traffic has the kind of importance that Alan Greenspan attached to scrap-steel prices as Federal Reserve chairman — and it isn’t going his way.
The CHART OF THE DAY compares the number of freight carloads at six of the largest U.S. railroads this year with the same period of 2008. Shipments tumbled 19.2 percent through last week from a year earlier, the Association of American Railroads reported yesterday.
Buffett follows this gauge more closely than any other index, Bianna Golodryga, a reporter for ABC’s “Good Morning America” program, said yesterday after she interviewed the billionaire investor. Its drop worries him, she reported.
Buffett’s Berkshire Hathaway Inc. owns a 23 percent stake in Burlington Northern Santa Fe Inc., the biggest U.S. railroad by revenue. The holding’s value was $5.25 billion at yesterday’s close. Among Berkshire’s common-share investments, only Coca- Cola Co. and Wells Fargo & Co. were bigger.
Berkshire also has stakes in Norfolk Southern Corp. and Union Pacific Corp., two other U.S. railroads. The value of those shares totaled about $545 million yesterday.
Greenspan followed the scrap-steel market to gain insight into the U.S. economy’s prospects. The rate at which cars and trucks are scrapped “has a pronounced cyclical pattern,” he wrote in a study…………………………………………………….
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