Berkshire enlarges its stake in Burlington Northern

Warren Buffett’s Berkshire Hathaway Inc. has acquired a 10.9% stake in Burlington Northern Santa Fe Corp., according to Securities and Exchange Commission filings, making the billionaire’s company the largest holder.

Berkshire owned 39 million shares of the second-largest U.S. railroad as of Thursday, after reporting a holding of 37.4 million Tuesday, the filings show.

Buffett reported to shareholders Feb. 28 all the company’s holdings with a market value of more than $700 million at the end of 2006. He noted that there were two exceptions to the list with a value of $1.9 billion that he didn’t itemize “because we continue to buy them. I could of course, tell you their names. But then I would have to kill you.”

The market value of the railroad stake is $3.2 billion.

“Buffett’s buying a great company,” said Andrew Kilpatrick, author of “Of Permanent Value: The Story of Warren Buffett.” “But who would have thought with all that is going on in the current era that railroads would be on his mind?”

Marc Hamburg, Berkshire Hathaway treasurer, declined to discuss the investment. Burlington Northern spokesmen Dick Russack and Patrick Hiatt didn’t return phone calls.

This is not “a typical investment” for Buffett, said Donald Broughton, a senior analyst at A.G. Edwards & Sons Inc. in St. Louis. “The industry is at peak operating margins and peak valuations.”

Buffett’s stock purchases make him the largest shareholder, ahead of Marsico Capital Management, which owned an 8.9% stake in December, according to Bloomberg data.

Burlington Northern covers a 32,000-mile route with its 6,300 locomotives and 220,000 freight cars. Union Pacific Corp. is the largest U.S. railroad.