Value Investing at its very best - Purchase of Burlinton National by Berkshire Hathway

Warren Buffet, the Guru has done it again. This time round its increasing his stake in the Railways.

He took a stake earlier (22%) and now completely bought over Burlington Northern Santa Fe, the second-largest railroad company in US for $34 Billion @ $100 per share, at 30% premium on Monday’s closing price.

He bet on the future of Railways earlier when he took stake in Burlington – 22%, Union Pacific 2%, Norfolk Southern – less than 1%. Now with the biggest ever purchase by Berkshire Hathaway, he has gone the whole hog. ( Before this, the biggest acquisition was the $16 billion purchase of General Re in 1998).

Salient Features of the investment -
# It’s a major wager on the health, strength and future of the US economy.
# It’s a stake in the industry which hauls everything big & small, commodities to consumer products to heavy machines. Growth will mean more haulage both for export of crop produce, imports from all over, Coal for energy etc.
# The railways make economic sense and thus are being increasingly preferred, as the prices of oil remain firm given its limited availability. To put into context , one train roughly hauls 280 odd trucks.
# Captive consumption – Berkshire already owns major utilities which rely on coal.
# Moat – After consolidation the current rail road industry in US is a virtual monopoly with major deterrents for new entrants, so a perfect Buffet moat.
# Proxy investment into Coal & energy - Rather than buying expensive coal mines, he bought into the Coal logistics as the Coal fired plants grow so will the use of railroad for its supplies. Nine new plants have been approved & 25 are under const. for a total 15,000 MW.

# Why Burlington – Another Buffet principal , always go for companies having strong managements. It has a strong management team which deployed technology, consistently improved efficiency and cut costs to make it more profitable.

# Timing and Price - The investment was made at almost the bottom when the company reported much lower volumes consequent 30% drop in profits. The things are not going to get any worse.

Summing up, current fundamentals may look weak and shares fully priced but when one peeps into the future both near & distant, this will turn out to be one great investment.

An Ode to the Wizards & the Change Agents

Man's destiny is written by God almighty while his earthly existence and behaviour is shaped by numerous influences which the people and environment bring on to him.

It would be appropriate to start with a note (a bit longish , pls bear) acknowledging my debt to God and to the individuals who helped shape my investment thought, professional behaviour, the individual I am and touched me in many, many ways unsaid.

God - Thank you for a great life , career, family , friends , mentors, peers and opportunities ....opening two doors for evey single one closed.

Investment Gurus

Dr Chopra - my investing journey began with him... i used to go to him to clear my chemistry doubts while in school and would find him surrounded with financial newspapers & journals. On questioning him about their purpose, he would give me a sympathetic look which you reserve for a "Bacha" (small kid) asking too much. But when on the good days he would decide to explain, he would do so for not less than hour or two and thus sowed the seeds of my financial independence.

S S Grewal - I was introduced to him through his book gifted to me by Dr. Chopra, through his newspaper columns and later had the fortune of personally knowing him.

Mr Lamba - My uncle & my friend, who would guide me with his knowledge. He made me join an investment club of which I was the youngest member and would get weird stares - loudly saying that ...what is this kid doing here ???

Warren Buffet, Benjamin Graham, Philip Fisher - Early on in my career I faced a huge personal challenge.....I mitigated my pain, as I lived my life one day at a time, by reading whatever I could on these greats - knowing that this knowledge would be my wet blanket in future.

Ramesh Damani - It was his guidance that gave me both the foresight and courage to quit Ranbaxy & take up investing as a full time career and activity.

Gundeep Gill - a great friend , who has been an excellent support throughout.

Professional Rain makers

Ranbaxy - A great company which gave me a career spanning the globe across two decades, run by great set of people who supported me and made me challenge all known human barriers.

Malavinder - It was great working with him up close .... I thank him for a lot of things , especially the support in some of the professionally trying moments ...his thinking off his feet and handling of the press was amazing.

Rahul Goswami - I started work in Ranbaxy with him & was one big influence both with his intellect and calm. A true mentor in every sense.

Omesh Sethi - the gentle giant - polite but very firm. No chess with anyone....very few of his ilk in our profession now.... great knowing and working with him.

Manish Dawar - An old friend & guide ...I owe my CA to him...very reserved in public but we would talk endlessly for hours (frustrating even the extremely patient Aunty ji - his mother). When I shared my idea of leaving Ranbaxy and moving full time into equities with him.... he wanted me to seal it there and then.

Yogesh Sareen - a great intellectual & a friend from back home ....has always been there for me. We unwind on evening walks even now and he will take care my childern's education if my venture fails .. !!

Rajendra Sinh - He hired me in Ranbaxy and has been a great influence since. He supportted me big time throughout our journey together and much after that...no words

KL Khurana - The Boss, who was miles ahead of the rest ....with his financial insight, hardwork, knowledge, personal conduct.

Ig Viljoen (I-kh Phil-yoon) - The Afrikan who taught me to balance my work ,family & religion. Interestingly i discovered my religion via South Africa. Very knowledgable and straight forward...once convinced of the person would go the whole hog for him... gave careers to lot of people working with him , he supported me a lot when others were creating nonsense ...wish he had continued more with Ranbaxy, life would have been very different ..i owe a lot to him.

Debashis Dasgupta - He is a wonderful person , thorougly professional and conducts himself with elan. Its a tribute to his skills that he has graduated from Finance into business and currently heads Europe for Ranbaxy.

Satish Chawla - He taught me Gita - that helped me work without looking for trivial goals of the material world.

Tavinder Vasudeva - we worked together for more than 6 years in different regions and shared many great successes together.

Naveen Sharma - Has been a great friend and we have been together in thick and thin of life. Bowls perfect " Ghees " ...you may be the best cricket player in the world but try giving him 3 inches below the bat ....out go the stumps !!! ....

Atul Sobti, Ram Ramasundar, Davinder Jaaj, Pushpinder Bindra, Vinay Kaul, Surjeet, Naresh, Pawanpreet, Manoj Fake, Biplab Sen, Chauhan, Sudhir Vaid, Alan Thompson, BK Raizada, Vijay Kumar, Sanjiv Kaul, R. Sundarajan, Sanjiv Chopra, Brian Tempest, Peter Burema, Anjuna Kalsi, KK Puri , Shankar Narayanan , Ranjan Chakravarthy, JF Picard, Ganesh, Maninder, Strauss, Mihir Chayya , Jaideep, Aman khanna, Sandeep Juneja, Rajbeer Sachdeva, Anil Gupta, Ranjit Kohli, Rajesh, Deepak, Krishna, Surbhi, Late Shina Lawal & Late Tapan Datta were others who i had the fortune of working closely with.

The Family

My Parents - They have been the nicest pair i have come across .... who whole heartedly supported the extended family of their brothers and sisters , even cousins despite their modest means and then took all the muck the world (read these same so called relatives) could throw without a grudge and provided a living example to us beyond compare.

Elder Bro Upkar - He was always there for me , is extremely intelligent and well rounded individual - did my summer holiday homework , protected me against bullies, taught me cricket, answered my questions through detailed letters from NDA and what not. He let go what could have been a great career in industry for his passion - the armed forces. He is a fighter pilot and a great asset to the Air force.

Keena (Wife) - Her unflinching support at all times has been great ....tagged with me where ever i went ...truly like the nomads pitching tent where the night fell ... i would be in office and she would have settled in any new place with no questions asked !!

Mansha (D) - An amazing kid, she has travelled through the world with us , spoke standard Chinese as a kid and doing well in whatever she puts her mind to ....from studies to school band......can beat the whole world if she decides to !!

Manan (S) - Practical , techincal & logical kid , can remember as many mobile nos as needs to needle his friends dad's for favourable negotiations. I missed most of his childhood ....saw him first when he was 2 months + as didnt get leave, would ask me if i still have to go back to office if i were to return at 8.30 pm ......I am trying to make up for the lost time ...hope i can ...!!!!

Friends - all left a piece of them in me !!

GNPS - Prince Harpreet Singh, Ajay, Budhiraja, Cuckuria, Baggi, Jassa - Talo Patalo, Amanpreet Kang, Harkirat, Iraqi Sardar ...name?? & some names i am forgetting

GMHS 35 - Yati, Vivek, Haru, Late Jassa, Tarun, Chandana, Amrika, Jaagi, Mandhir, Mukesh, Harpreet Banga, Gurkamal Bedi, Ravinder Pal , Seema Kohli, Sonia, Neeta , Sukhpreet, Jayanti, Ishpal, Vinni, Manpreet, Sarabjeet X2, Kuldip, Satinder, Rajinder, Guri, Harpreet K, Late Navneet Matharu, Bharat Bhushan, Chandrashekhar, Mini, Ritu, Sanjay Mago, Pawan Lamba + +

Others - Sandeep Grover, Navi Grewal, Jyoti, Pawan Tur, Manas, Raju Lamba, Sumant Batra, Alok Mehta, Varun Khurana, Tina, Anil, Amry, Romy, Bobby, Bholu, Tinku , Tony Singh IPS , Sanjay Pathak, Binu, Bhapa and many others

SD College - Rachna, Naveen, Vivek, Sandeep, Ajay, Kalra, Jolly, Khanna and many others

CA - Sandeep, Vikas, Neelkant, Shiraz Khanna, Vineet & Simrat Khurana, Late Hardeep, Inderpal, Mr Mittal Vineet, Late Bikramjit, Rocky and numerous others

Paonta Sahib - Bawejas, Landlords - SDM Paonta, Choudarys - Sr & Doc, Excise Supdtt - Trikha & The dy. Surdee, Uniyal, Arvind, Bahuguna, Dalal,

China - Naresh Sharma, Sofia and others

Nigeria / Africa - Nico & Anita Van Der Merwe, PGR Prasad, Satish Kyshap, Madanjits, Gejjis, Hari, Santharam, Hemant sharma, Hemant arora, Hanwant Arora, Patel, Gagan, Murli, Strauss, Cameroon, Adesanya, Adenji, David, Sam, Niya, Kufre, Dan Akujobi, Aniyasu, Idowu, Sunday, Charles, Ameth Diagne, Jaideep rai singh, Aman khanna, Sandeep Juneja, Inderjeet, Navdeep sodhi, Path group and others

UK - Sameer Trivedi, Hentric

Russia & CIS - Raghu, Chou, Kishore Budhgavi, Sorabjees, Shanker, Jeetu, Ramesh Chandra,AVM Chauhan, Cmde Jamwal, Gen Chabewal, Brig Paramjit, Shiv Kumar x2, Shekhar,Sandeep Nasa, Rajesh Sondhi, Surjit Singh, Sujeet Singh, Manish Kumar, AVM P Singh, AM Bangu, Satya, Mr Sethi, Mr Gupta, Mohan, Lalit, Surendra, Arvind, Shinu, Shalu, Katya, Elena X 2 ,Valery, Bawa, Pratap, Pawan, Dimitry Kuksin, Amrendra, Rao, Alok Batra, Yogish Agarwal, Devendra Saini, Chanchal Lahri and many others

Ludhiana - Jawahar Lal Oswal, Faqir Chand

Nirvana Roadies - Amren & Neeta, Thanwanis, Sunderlals, Bakshis, Guptas, Manish, Bhardwajs, Goyals, Banerjees

Pace Financial - Amit & Atul Goel, Great set of guys , very well grounded, Pushkan & Abhishek

Entry India - Rajesh Mehta - a very nice person and a close friend, Abhishek Nahata, Karan Trehan

my regret is that I wanted to write a few lines about everyone, but had to list only in my attempt to limit the size of the blog...please excuse !!

And in addition i missed many others especially my teachers & professors , close friends in school , college & CA and others who I may have missed listing here ....but they are there always for me and I would try to cover their contributions & anecdotes on the time spent together in subsequent blog posts.