‘Opportunities Abound’

Buffett praised the spending by his deputies this year in his letter to shareholders. Berkshire will keep its “foot to the floor and will almost certainly set still another record for capital expenditures in 2013,” he wrote. “Opportunities abound in America.”

The dealmaking and expansion plans of Berkshire’s managers have helped reduce pressure on Buffett to allocate its cash pile, which climbed to a record $49.1 billion at the end of March. Buffett used funds from insurance units to buy whole businesses and build the largest equity stakes in Coca-Cola Co., American Express Co. and other publicly traded firms.

While Buffett is still seeking to buy companies and invest in stocks, Berkshire’s model has shifted to more capital- intensive businesses in the last 15 years as he added the railroad, MidAmerican, Lubrizol, industrial manufacturer Marmon and Israeli toolmaker Iscar.

Insurance operations including Geico have also been expanding. Buffett said last week that his company is planning to get into commercial insurance “big time” after hiring four executives from American International Group Inc.

Bigger Railroad

BNSF plans to increase capital spending to a record $4.1 billion this year as the railroad prepares for rising oil shipments and expands terminals that can handle containers that move by rail, road and sea. That includes $2.3 billion on the rail network and about $1 billion on locomotive, freight car and equipment purchases.

“These are 20, 30, 40, 50-year assets,” BNSF CEO Matt Rose said in an interview at the meeting with Bloomberg Television’s Betty Liu, who asked about spending. “It’s just a long-term belief that the U.S. economy will continue to grow. Population will drive that. And we want to make sure that we have the physical plant to take advantage of it.”

MidAmerican said last month that it allocated $11.8 billion for spending in the next three years on development and maintenance capital expenditures. CEO Greg Abel formed a renewable-energy unit last year to invest in wind and solar projects and struck a deal with TransAlta Corp. to build natural-gas power plants. The companies are bidding to develop transmission lines to supply electricity to Canadian oil-sands projects.

Berkshire Class A shares climbed 24 percent this year through yesterday after rallying 17 percent in 2012.