Deconstructing Buffett
Felix Salmon submits: Alice Schroeder has two interesting takes on Berkshire Hathaway’s (BRK.A) acquisition of Burlington Northern (BNI). In her BusinessWeek cover story on Warren Buffett, she explains the hidden upside: Buffett always likes a sweetener, and Burlington gives him one in the form of information. He learns about wallboard demand from USG and consumer-credit trends from American Express, but Rose has called the railroad a kaleidoscope of the economy. Rail traffic patterns are a window on commodity, wholesale, consumer, and international trade flows. Buffett is adding this kaleidoscope to what his other CEOs tell him about the “reset of the consumer” to a lower level of spending. They feed him data from Berkshire’s portfolio of companies—sales of building materials, jewelry, furniture, real estate, credit, fractional jets, vacuum cleaners, fabricated steel, newspaper ad lineage, and other products and services. He may now command as much information about the state of the U.S. economy as anyone, including the Federal Reserve—and probably gets his faster.Complete Story »
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