The Next Buffett?

Berkshire Hathaway (NYSE: BRK-A  ) recently announced that it would buy Burlington Northern Sante Fe (NYSE: BNI  ) for $100 a share. The deal is a textbook example of Berkshire CEO Warren Buffett's investing prowess. Railcar loadings are one of his favorite economic indicators, and Buffett is buying a quality freight business at what data shows to be near the bottom of this deep contraction in economic activity. The "Oracle of Omaha" calls the pending purchase an "all-in wager on the economic future of the United States."

While I'm always impressed at Buffett's eye for value, I must admit that recently I have been taking my cues from a new rising star in the investment world. He's been using his influence to help usher in an economic revolution, all while net worth skyrockets.

Who is this savvy investor, the man who some (actually, just me) have dubbed the "Prognosticator of Nashville?"

Drumroll please ...
Depending on your political affiliation, the words "Al Gore" sound either pleasant or painful to your ears. But we would be wise to keep our eyes on what he is doing these days. After all, Mr. Gore was a major architect of the development of the Internet in the 1990's. His political opponents may snicker about claims of 'inventing' the Internet, but history shows that government policies directing Federal dollars toward technology research, as well as tax incentives for businesses, helped lay the groundwork for the tech revolution. Al Gore, like him or not, was an integral part of this effort.

Now, the former Vice President is one of the leading advocates of the Green Revolution -- a conscious government effort akin to the development of the Internet, aimed at making renewable energy and clean technologies a reality. Just last month, President Obama stood in Florida with executives from FPL Group (NYSE: FPL  ) and Florida Power and Light to commission the largest photovoltaic solar power plant in the country. On the occasion, Obama also announced $3.4 billion in Federal grants to help update the electric grid by funding more smart meters and better network management. This is another milestone in the shift to a green economy.

Put your money where?
As a private citizen, Al Gore can now put his money where his mouth is. According to a recent New York Times article, his venture capital partnership is invested in a small smart metering company that will benefit from the recently announced grants. In addition, Gore has stakes in companies making electric vehicles, solar power, and a carbon trading exchange. He stands to profit handsomely as the U.S. economy shifts to a less carbon-intensive platform. Some are even predicting that he will be the world's first "carbon billionaire."

But let's go back to Buffet, who is a billionaire, and who also has a green streak. His purchase of Burlington Northern is a vote of confidence in the Green Revolution. Railroads, as Burlington tells us, "move 40 percent of our nation's freight, but account for just 2.2 percent of all transportation-related greenhouse gas emissions." Buffett noted that in a fossil fuel-challenged world, rail has a competitive advantage over trucking because it is more fuel-efficient and greener. Even Norfolk Southern (NYSE: NSC  ) and CSX are already developing hybrid locomotive technologies. Coming legislation to reduce carbon pollution could accelerate that push.

Buffett is partially following the Gore investment thesis that carbon reduction will mean increased profits. A more unlikely pairing than the Oracle of Omaha and Mr. Inconvenient Truth is tough to imagine.

The revolution marches on!
Buffett and Gore are just two foot soldiers in this new green tech revolution. Big companies are also getting behind this massive shift in the economy. Conglomerates like General Electric (NYSE: GE  ) and Siemens are developing an array of green technologies in lighting, appliances, and battery technologies. Cisco Systems (Nasdaq: CSCO  ) and IBM (NYSE: IBM  ) are major players in managing smarter electricity infrastructure.

But these are big names that are widely followed, and their current size may limit their upside.

This is where the Rule Breakers team can help. By building a solid green portfolio, including some smaller and lesser-known green names, you will be on your way to profiting alongside Buffett and Gore. Currently, our team of analysts has identified three leading alternative-energy picks. If you'd like to read about those ideas and have full access to all of the team's recommendations free for 30 days, just click here.

Fool contributor Matt Hoffman owns no shares of any of the companies mentioned. Berkshire is both a Stock Advisor and an Inside Value selection, as well as a Fool holding. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 04, 2009, at 5:57 PM, peters46 wrote:

    Mr Gore has been so wrong about so much, do you expect him to be right this time? Like flipping tails ten times so you expect the odds are that he will finally flip heads?

  • Report this Comment On November 04, 2009, at 6:29 PM, xetn wrote:

    So, just to recap, the former VP has been going all over the world proclaiming the end of the world as we know it by global warming (which has changed its name to climate change after global temperatures capped in 1998) and then getting the US government to "create" opportunities that he has invested in? A little mutual back-scratching if ever there was. Another example of government transferring wealth from one or more groups to a "favored" group through legislation. Exactly like the "China tire tariff" to favor the unions, or "Cap N Trade" to favor Al Gore.

  • Report this Comment On November 04, 2009, at 6:30 PM, davejh23 wrote:

    Gore is a lobbyist for his own wealth. He doesn't invest how he does because he believes in it. He invests how he does because he has enough influence to push billions of dollars in the direction of those investments. In either case, invest accordingly.

    As for Buffett, "His purchase of Burlington Northern is a vote of confidence in the Green Revolution."

    I'd say this is a bet on higher energy prices, and a forced shift from trucking to rail transport. It's likely a bet on future inflation as well...why would he go and spend all of his available cash now? Everyone's claiming that this is an all-in bet on the future health of the economy, but that's not what Buffett said...perhaps it's an all-in bet on future weakness.

  • Report this Comment On November 04, 2009, at 8:04 PM, RaymondWaliany wrote:

    Most of the upward move on the companies with green house connnection has already occured and I wonder if there is any more space for more upward movement.

    Watch out for another bubble!!

  • Report this Comment On November 04, 2009, at 8:13 PM, sbossert wrote:

    Buffett practices what he preaches. He preaches responsible, transparent management. All these years, he has only taken a salary of $100K per year from BRK. Gore on the other hand is a charlatan. Global warming is such a lie, it had to be renamed to climate change (it's been flat or colder since 1998). He tell us to do as he says, not as he does. He tells us to live green, but he has one of the largest carbon footprints known to mankind. I'll stick with Buffett. You can have Gore.

  • Report this Comment On November 04, 2009, at 8:30 PM, xetn wrote:

    Or as Casey Reports stated it:

    "Al Gore has been taking some heat recently for his dual role as advocate and investor. Critics say Mr. Gore is poised to become the world’s first “carbon billionaire,” profiteering from government policies he supports that would direct billions of dollars to the business ventures he has invested in.

    Gore says that he is simply putting his money where his mouth is. But is that really the case?

    Here’s an excerpt from The New York Times about one of Gore’s recent deals.

    Former Vice President Al Gore thought he had spotted a winner last year when a small California firm sought financing for an energy-saving technology from the venture capital firm where Mr. Gore is a partner.

    The company, Silver Spring Networks, produces hardware and software to make the electricity grid more efficient. It came to Mr. Gore’s firm, Kleiner Perkins Caufield & Byers, one of Silicon Valley’s top venture capital providers, looking for $75 million to expand its partnerships with utilities seeking to install millions of so-called smart meters in homes and businesses.

    Mr. Gore and his partners decided to back the company, and in gratitude Silver Spring retained him and John Doerr, another Kleiner Perkins partner, as unpaid corporate advisers.

    The deal appeared to pay off in a big way last week, when the Energy Department announced $3.4 billion in smart grid grants. Of the total, more than $560 million went to utilities with which Silver Spring has contracts. Kleiner Perkins and its partners, including Mr. Gore, could recoup their investment many times over in coming years.

    Silver Spring Networks is a foot soldier in the global green energy revolution Mr. Gore hopes to lead. Few people have been as vocal about the urgency of global warming and the need to reinvent the way the world produces and consumes energy. And few have put as much money behind their advocacy as Mr. Gore and are as well positioned to profit from this green transformation, if and when it comes.

    I have no problem with Gore getting involved with business and starting companies. Indeed, business and entrepreneurship is the most noble of paths. But Gore is no businessman or entrepreneur, he (like Ken Lay and Enron) is a rent-seeker. None of his ventures would be profitable on their own without government assistance (either in the form of direct subsidies or laws against competing firms).

    Rent seekers use political means – the government’s authority to initiate violent aggression and fraud – to contrive rents by preventing others from competing with them or by forcibly taking the wealth of others. Unlike profit-seeking, rent-seeking does not create wealth, it just transfers it from one person or business to another. When Gore wins rents by using political means, he is better off, but others, including potential competitors and consumers, are worse off.

    To quote Sanford Ikeda’s “Rent-Seeking: A Primer”:

    The latter [consumers] will pay higher prices, get poorer quality, or have fewer choices because political means are quite effective in discouraging rival entrepreneurs. The results of rent-seeking also stifle the competitive discovery process, so that consumers are less likely to become aware of more efficient methods or better providers.

    Thus the resources that competitive rent-seekers spend in their quest for these politically created rents are indeed wasted because they are used to produce an outcome in which nothing of value is created. Indeed, rent-seeking of this kind destroys wealth.

    So Gore really isn’t just putting his money where his mouth is. He’s putting his money, your money, and my money where his mouth is… and destroying wealth in the process."

  • Report this Comment On November 04, 2009, at 8:50 PM, 2beewise wrote:

    One need only study the polar ice caps and glassiers around the globe to understand the reality of global warming. Al Gore has been "awarded" an enormous amount of criticism and slander that has become "fact" in the minds of many Americans. I have followed environmental degradation issues for over 50 years and Al Gore is one of the most highly informed, sane and clear voices in that field.

  • Report this Comment On November 04, 2009, at 10:42 PM, Chinastocks55 wrote:

    GFRE: Gulf Resources Inc.

    Single best China energy stock to own right now.

    A 2010-2011 monster.

    http://topics.nytimes.com/top/news/business/companies/gulf-r.

  • Report this Comment On November 05, 2009, at 4:10 AM, Tortiewc wrote:

    I agree with 2beewise; Global warming is a reality;

    just study the polar ice caps and glaciers.

    Whomever said global temps capped in 1998 is just flat out WRONG and I'd like to know where they're

    getting their data from?

    Please visit 350.org or NRDC.org and educate your

    selves!

    Leave Al Gore alone, I think you're jealous!

  • Report this Comment On November 05, 2009, at 10:20 AM, TMFMuse wrote:

    Global warming a reality? I have my own (informed) opinion, but it really doesn't matter. That is to say, we don't need to be certain in order to make a rational choice on what to do (or not do).

    Take a look at this video that re-frames the debate into one that can actually bring believers and skeptics together on the issue:

    http://www.youtube.com/watch?v=zORv8wwiadQ

  • Report this Comment On November 05, 2009, at 2:15 PM, LRMarbitrage wrote:

    HAHAHHAH!

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