> Warren Buffett Blog: Berkshire allocates capital based on business needs

Wednesday, December 14, 2016

Berkshire allocates capital based on business needs


Warren Buffett on why Burlington North doesn't need more capital

A 22,000-mile railroad needed $4.5 billion last year and that’s what we gave them. If you gave them another billion dollars there isn’t anything to do with it. You’re serving your customers already and your track is in good shape. We allocate capital to the needs of the business. You can’t force-feed a See’s Candy. We’ve tried 50 different ways to use additional capital.

We paid $35.05 a share for the utility [in 2000]. And this year it’ll earn something around $30 a share, after tax.