BNSF chief lauds Buffett ownership style
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Warren Buffett is 'the ultimate hands-off' owner and has enabled the BNSF Railway to focus on executing its strategic plan without the short-term pressure of producing immediate financial results, Matthew Rose, the railroad's chairman and chief executive officer, said Monday.
Berkshire Hathaway, the publicly owned investment management company founded by the billionaire investor, completed its $35 billion acquisition of Burlington Northern Santa Fe Corp. in February. The move was widely viewed as a referendum on the railroad industry and its strong growth potential.
Rose said his early apprehensions about being privately owned were quickly allayed by Buffett.
'I want you to think of this railroad as your family-owned business that you're going to own for 100 years and just do the right thing,' he said the 'Oracle of Omaha' told him.
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Rose made his comments during a roundtable discussion on freight transportation held in Fort Lauderdale, Fla.
He said Buffett's long-term perspective is necessary for a capital-intensive industry like railroading, and should be emulated by the government as it considers the country's critical transportation infrastructure needs.
Buffett calls periodically to get information about companies to gauge their investment quality, but never asks about the performance of the BNSF Railway itself, Rose said.
That approach insulates the company from the quarterly pressures of Wall Street, where analysts sometimes criticized the company for applying 18 percent to 20 percent of revenues to asset maintenance and upgrades.
Ten years ago the average institutional owner of stock had a three-to-five year horizon for meeting investment goals, Rose said. Today, hedge funds and other large shareholders want to see substantial returns in one to three years, which constrains companies from investing in their infrastructure, he added.
BNSF last week reported third quarter net profit of $774 million, compared to $546 million in the same 2009 period. Revenue increased $800 million to $4.3 billion.
The National Industrial Transportation League, Intermodal Association of North America and Transportation Intermediaries Association hosted the roundtable as part of their joint annual meeting. ' Eric Kulisch