TheStreet.com TV Recap: Buffett Rides the Rails

Cramer breaks down Buffett's Burlington Northern stake.
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Warren Buffett made waves in the market today, buying an 11% stake in

Burlington Northern

(BNI)

, "the worst rail in terms of operating performance," Jim Cramer said on TheStreet.com TV's Wall St. Confidential

Web video Monday.

Cramer surmised that the other two rails Buffett most likely invested in are

Norfolk Southern

(NSC) - Get Report

, which preannounced a horrible quarter and didn't move down, and

Union Pacific

(UNP) - Get Report

, he told Gregg Greenberg, the host of Wall St. Confidential.

Union Pacific, which Cramer owns for his charitable trust,

Action Alerts PLUS, makes sense because it's a value play, Cramer said. It's the second-largest landowner in the country and is worth a "tremendous amount," he said.

Even though Buffett has been buying the rails on the way up, Cramer told viewers that Buffett has not betrayed his roots and that these companies are valuable.

"What people don't realize is that these stocks trade very thinly," he continued. "This is a group that has continuously shrunk the float. These are not companies that are like

Exxon Mobil

(XOM) - Get Report

with billions of shares."

Further, what Buffett's purchase of BNI tells Cramer is that coal is not going to be out of favor indefinitely, because BNI is the only company that can transfer a lot of coal.

When asked about the Dow transports, Cramer said he's been struggling over how much of an indicator the average really is. "I think the train companies are so far in excess of what the trucking companies are doing, it's a very split thing," he said.

Also, the airlines go up every time the price of oil goes down, Cramer said. The reason he said he is questioning the indicator "is because utilities are hitting the same high, too."

"I've never seen this happen," Cramer said. "Every time the utilities would go up, I would short the transports, and every time the transports hit a new high, I'd short the utilities. This is obviously no longer the case."

At the time of publication, Cramer was long Union Pacific.

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