Berkshire Hathaway: This Isn't Supposed To Happen -- A Closer Look -- March 20, 2022

Note: Op-ed. How I see things. If this is important to you, go to the source.

I'm not sure if BRK-B hit new all-time 52-week highs three consecutive days last week or not. 

If I'm reading the Yahoo!Finance site correctly, BRK-B hit new all-time 52-week highs last week, Wednesday, Thursday, and Friday. BRK-B closed at 52-week all-time highs on Wednesday and Thursday, but on Friday, after hitting a 52-week all-time high for the third consecutive day dropped back at the end of the day to close at $342.41, down from the intra-day high of $346.87. 

BRK-B is a value stock; it's not supposed to be moving this high this quickly. 

So, what's going on.

Most folks are focused on:

• Charlie Munger: killing it! And,
• Warren Buffett: killing it!

Prior to the weekend, the big stories that were moving BRK-B:

• China, reversing course, said it would support the market and re-opened Shenzeng, which made Charlie Munger's bet on Alibaba look brilliant.

• Meanwhile, excitement in the oil patch, especially OXY, made Buffett look like a genius.

But there's a third story It broke over the weekend.

Although the stories are conflicting, it sounds like Canadian Pacific has locked out the union. If not, the union sounds like it's not having its workers report to work on Monday.

West of the Mississippi, or thereabouts, there are three -- and only three major railroads:

• BNSF: wholly owned by Warren Buffett's Berkshire Hathaway
• UNP; and,
• CP with its partnership with KSU (more on that later). 

It's worth repeating: Rail transport comprised only 9% of Berkshire's total revenue, but it generated over 25% of total EBT.

From an earlier post:

Buffett:

• BNSF? Best buy ever? How Berkshire Hathaway makes money, Investopedia; 
• BNSF Railway Berkshire's freight rail transportation business operates one of the largest systems in North America. BNSF Railway ships coal as well as consumer, industrial, and agricultural products.
• BNSF Railway's revenue fell 11.3% in 2020 to $20.9 billion as EBT fell 6.3% to $6.8 billion. Rail transport comprised only 9% of Berkshire's total revenue, but it generated over 25% of total EBT.
  

When the media reports BRK's stock portfolio, they generally do not include the companies Warren owns outright. Look at BNSF:

On another note, AAPL, comprising 43% of BRK's entire equity portfolio is trading at recent lows. Once AAPL gets back on track, BRK is going to look even better.

So, bottom line, hitting on all cylinders, BRK:

• the China story, thumbs up;
• oil and OXY, thumbs up;
• Apple and AAPL, thumbs up; and,
• now, CN could face work stoppages, benefiting UNP and BNSF.

I'm looking for UNP and BRK-B having another good week.

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The CP-KSU Merger

Now, back to the CP-KSU merger. 

It's gonna happen but it's not over yet.

Shareholders voted to approve the merger and to the best of my knowledge, the KSU shareholders already got their $90 / KSU share and their CP shares. 

The final regulator to approve the deal says CP has supplied all necessary paperwork.

UNP is contesting but I doubt it will go anywhere. 

The procedural schedule is here. 

Only date of interest too most folks: July 1, 2022.

Final briefs are due July 1, 2022.

I assume the final regulator, thee Surface Transportation Board, will announces its decision on or before December 31, 2022.