Prominent value investor Warren Buffett made a bet on the future of America with his purchase of Burlington Northern Santa Fe. While few are as rich as Buffett, it doesn’t mean you can’t play along with what he’s buying using exchange traded funds (ETFs).
Warren Buffett’s company Berkshire Hathaway (NYSE: BRK-A) announced this week that it plans to buy Burlington Northern Santa Fe (NYSE: BNI) for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.
- iShares Dow Jones Transportation Average (NYSEArca: IYT): up 7.2% year-to-date ; BNI is 11.4%
According to records, Berkshire Hathaway sold shares of Moody’s (NYSE: MCO) after the ratings firm signed off on mortgage securities that turned toxic. During the second quarter, Berkshire dumped Constellation Energy (NYSE: CEG) and reduced holdings in ConocoPhillips (NYSE: COP), Home Depot (NYSE: HD) and United Health Group (NYSE: UNH). The money was used to purchase preferred shares of General Electric (NYSE: GE) and Harley Davidson (NYSE: HOG).
- Vanguard Industrials ETF (NYSEArca: VIS): up 12.5% year-to-date; GE is 12.5%
- First Trust Large Cap Value Opp AlphaDEX (NYSEArca: FTA): up 28.5% year-to-date; HOG is 1%
Berkshire also bought two common stocks that are more widely available: Becton Dickinson (NYSE: BDX), distributor of medical supplies, and Johnson & Johnson (NYSE: JNJ), maker of drugs, consumer products and medical supplies. Value investors should noted that both BDX and JNJ have increased dividends each year for more than three decades. (How healthcare overhaul affects ETFs)
- iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 10.3% year-to-date; BDX is 1.2%
- Pharmaceutical HOLDRs (AMEX: PPH): up 3.5% year-to-date; JNJ is 25.2%
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.