Railroad stocks have outperformed the S&P 500 by 10% since Berkshire Hathaway acquired Burlington Northern Santa Fe Railway early last month, but the risk of underperformance now looms large between now and year’s end, says UBS.
“[T]his is the third period of outperformance on the back of significant Buffett investments in this industry, and the stocks quickly gave back half of those relative gains on the back of the first two of these Buffett ‘bubbles,'” firm notes. Says UNP “has the most to lose if this bubble unwinds” as it’s the biggest outperformer since the BNI deal was announced.
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