Burlington Northern Santa Fe

Buffett wrote that Berkshire's resilience during the pandemic came from the diversity of its non-insurance operating businesses, each of which had its own demand cycle but whose aggregate cash flow was durable across most scenarios. He argued that the lesson of the period was the value of owning businesses whose balance sheets and cash flows could absorb shocks without requiring external capital, and that Berkshire's conservative capital structure was itself a competitive advantage in a crisis.

On resilience and the value of a conservative balance sheet.

Buffett described the BNSF acquisition as a bet on the long-term future of American rail freight and, more broadly, on the American economy. He argued that rail's fuel efficiency relative to trucking, its durable right-of-way, and the capital intensity that protected it from new entrants made it an attractive long-horizon asset, and that owning it outright allowed Berkshire to redeploy the cash flows it generated rather than merely collect a dividend.

On the rationale for the BNSF acquisition.

Buffett wrote that the test for a large acquisition was whether it would increase Berkshire's per-share intrinsic value, and that the test had to be applied against the alternative of buying back Berkshire's own shares or returning capital to owners. He argued that the discipline of comparing every use of capital against the intrinsic-value-per-share benchmark was the chief defense against the temptation to do deals for their own sake.

On the per-share intrinsic-value test for acquisitions.