BNSF's response wins praise, but derailment underlines safety fears

The fiery derailment of a BNSF train carrying ethanol and corn syrup early Thursday forced several hundred residents of a small Minnesota town to evacuate their homes, and has once again highlighted rail safety problems.

BNSF has been a subsidiary of Berkshire Hathaway since Warren Buffett announced in 2009 that he would be buying it for his conglomerate, calling the purchase an "all-in bet" on America.

VIDEO: Aerial video shows aftermath of fiery BNSF train derailment in Minnesota

While the ethanol did burn for hours, it isn't as dangerous as the chemicals that were on the Norfolk Southern train that derailed in Ohio last month.

The Associated Press reports officials aren't worried about groundwater contamination because much of the ethanol will burn off and the ground is frozen.

In addition, the U.S. Energy Information Administration says, "pure ethanol is biodegradable and breaks down into harmless substances if spilled."

The AP also noted that while Norfolk Southern's CEO did not immediately come to the scene of the East Palestine derailment, "BNSF CEO Katie Farmer showed up on day one to apologize and promise a thorough cleanup."

At a news conference with Minnesota Governor Tim Walz, Farmer said, "We will have our team here until this is cleaned up."

Walz called the railroad's response "unprecedented, in my opinion."

Berkshire's OXY purchases top $1 billion in March

Berkshire Hathaway revealed this week that it has purchased another 3.7 million shares of Occidental Petroleum for $216 million. 

The purchases were made on Thursday of last week and Monday of this week.

It's the third round of purchases this month over a total of eight days.

Berkshire has spent a bit more than $1 billion on OXY shares so far in March, the largest total for a month since last July when it paid more than $1.3 billion.

After spending $391 million in August and $352 million in September, Berkshire didn't make any more purchases until earlier this month.

In between, OXY shares traded in the $60s and $70s.

CNBC Pro reports that in the wake of the latest purchases, TD Cowen upgraded Occidental to outperform from market perform.

"Berkshire buying shows little evidence of slowing. We see a superior risk-reward balance of superior exposure to crude pricing, capital structure shifts, captive buying support from Berkshire Hathaway, a favorable free cash yield, well productivity and a differentiated catalyst rich profile in a world of relatively homogeneity across E&Ps."

According to CNBC Pro, of 28 analysts covering OXY, 14 have a "hold" recommendation, nine say "buy," and three rate the stock as a "strong buy."

Two expect it to "underperform" and no analysts have a "sell" recommendation.

The average price target is $71.88, about 15% above its current price.

The highest target is $93.00 and the lowest is $47.00.

BUFFETT AROUND THE INTERNET

Some links may require a subscription

• Business Insider: Warren Buffett missed out on a monster return by not investing in Tesla early on, Elon Musk says

• Bloomberg (subscription): BYD’s Net Income Jumps More Than 400% as EV Shift Takes Hold

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Mar. 31, 2023

Berkshire's top holdings of disclosed publicly-traded U.S. stocks, and BYD, by market value, based on today's closing prices.

Holdings are as of December 31, 2022 as reported in Berkshire Hathaway’s 13F filing on February 14, 2023, except for:

• Apple, Bank of America, and Chevron, which also include shares held as of December 31, 2022 as disclosed in New England Asset Management’s 13F filing on February 14, 2023
• BYD, which is as of February 3, 2023
• Occidental Petroleum, which is as of March 27, 2023

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

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Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch