A great find by Shai at the Reflections blog. There are some interesting thoughts in the article on Burlington’s moat and the long-term nature of its cap-ex – which may help to explain Mr. Buffett’s purchase in light of his more recent comments on higher inflation expectations and his past comments about how severe inflation hurts businesses that have to keep reinvesting in cap-ex during inflationary times. Maybe the business categories aren’t just ‘capital intensive businesses’ versus ‘non-capital intensive businesses’ and that during times when there is a significant risk of inflation within a few years, the nature of cap-ex is almost as important as the cap-ex itself. The end of the article discusses some of the cap-ex Burlington has made since 1995.
Link to: Why Buffett is Betting on the Railroads