Professor Buffett's Energy Lesson
NEW YORK ( TheStreet) - Warren Buffett's cardinal rule of investing is "Don't Lose Money."
To achieve this goal, the Oracle has traditionally invested in boring firms with easy-to-understand business plans. For Buffett these are the qualities of an investment that are certain to return a comfortable profit. While underwear and candy have usually been this investor's bread and butter he has recently made interesting bets on the energy game.
Buffett, however, has not taken a direct approach to investing in this sector. Rather than holding instruments like futures contracts for commodities or ETFs like UNG and USO, Buffett has used some of his more recent investments as indirect ways to play how he expects the future of the world's energy will play out.
However, the investor, who's not keen on the idea of taking any losses, has taken an interesting approach that will likely ensure a sure thing no matter how our energy taste pans out in the years to come.Last week, Buffett made headlines when he decided to purchase the remaining shares of Burlington Northern Santa Fe (BNI) for over $26 billion. This move, the largest in the history of Berkshire Hathaway (BRK.A - Get Report) , was seen as a strong indication of Buffett's confidence in the United States' economy and the future of coal. Burlington Northern is a huge player in the U.S. coal industry. According to the firm's Website, the railroad transported 297 million tons of the black rock across the nation last year. The electricity produced from the company's hauls alone fulfills more than 10% of the United States' total demand. In the third quarter of 2009, coal deliveries accounted for 25% of BNI's total revenue.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts