Warren Buffetts Purchase Of Burlington Northern Provides Major Boost To The Transportation ETF

“Warren Buffett’s $34 billion purchase of Burlington Northern Santa Fe [[BNI]) sent the transports up 4.5% at the open Tuesday, and iShares Dow Jones U.S. Transportation Index (IYT) up 4.7%. At 11.38% of IYT as of yesterday’s close, BNI is the largest holding in the ETF,” Don Dion Reports From The Street.

“Shares of BNI gained more than 28%, and with the deal valued at $100 per share, shares have only about 3% more to go. BNI’s advance accounts for nearly 3% of IYT’s gain, and the halo effect lifted other railroads such as Union Pacific (UNP) and CSX (CSX) by 5.5% and 6.5% in early trading. Those two firms account for 8.12% and 4.92%, respectively, of IYT’s assets,” Dion Reports.

“As the economic slowdown cut into the profits of major railroads, traffic dropped and shares fell. The slowdown, however, has been an optimum time for railroad executives to reexamine their business models, and operators have been boosting efficiency even while worrying about the bottom line,” Dion Reports.

See story at TheStreet.com: HERE

The investment (IYT) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Transportation Average index. The fund uses a representative sampling strategy to try to track the index. The index measures the performance of the transportation sector of the U.S. equity market. The index includes companies in the following primary groups: airlines, trucking, railroads, air freight, transportation services and industrial services. It is nondiversified.

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