April 7 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. has acquired a 10.9 percent stake in Burlington Northern Santa Fe Corp., according to Securities and Exchange Commission filings, making the billionaire's company the largest holder.

Berkshire owned 39 million shares of the second-largest U.S. railroad as of April 5, after reporting a holding of 37.4 million on April 3, the filings show.

Buffett reported to shareholders on Feb. 28 all the company's holdings with a market value of more than $700 million at the end of 2006. He noted that there were two exceptions to the list with a value of $1.9 billion that he didn't itemize ``because we continue to buy them. I could of course, tell you their names. But then I would have to kill you.'' The market value of the railroad stake is $3.2 billion.

``Buffett's buying a great company,'' said Andrew Kilpatrick, author of ``Of Permanent Value: The Story of Warren Buffett,'' in an interview from Birmingham, Alabama, today. ``But who would have thought with all that is going on in the current era that railroads would be on his mind?''

Marc Hamburg, Berkshire Hathaway treasurer, declined to discuss the investment. Dick Russack and Patrick Hiatt, spokesmen for Burlington Northern, didn't return phone calls.

Not Typical

This is not ``a typical investment'' for Buffett, said Donald Broughton, a senior analyst with AG Edwards & Sons Inc. in St. Louis. ``The industry is at peak operating margins and peak valuations.''

Buffett's stock purchases make him the largest shareholder, ahead of Marsico Capital Management LLC, which owned 32 million shares for an 8.9 percent stake in December, according to Bloomberg data.

Berkshire would have had to disclose the rail stake upon exceeding a 5 percent threshold if Buffett was purchasing the Burlington Northern shares with the intent of making a takeover bid, seeking a board seat, or otherwise influencing management.

In some cases, passive investors can wait until the end of the year to report 5 percent holdings, although investors do have to file with the SEC within 10 days of reaching or exceeding a 10 percent stake.

Three Transactions

Berkshire also discloses its stock holdings at the end of each quarter through a portfolio report generally filed by money managers. However, Buffett, 76, for many years has used a loophole in filing requirements that allow money managers to delay reporting holdings if disclosure would compromise a proprietary trading strategy.

Buffett paid $81.18 to $81.80 in three stock transactions on April 4 and April 5, according to the filings. Burlington Northern rose $1.03 or 1.3 percent, to $82.72, on April 5 in New York Stock Exchange composite trading.

First-quarter profit at Burlington Northern will be cut to about 96 cents a share because of $80 million in environmental costs and a writeoff for scrapped equipment, the Fort Worth, Texas-based Burlington Northern said on April 5. The company earned $410 million, or $1.09 a share, in the first quarter of 2006.

Burlington Northern covers a 32,000-mile route (51,499 kilometers) with its 6,300 locomotives and 220,000 freight cars that haul coal and grain, among other goods. Its biggest shipping category is industrial products.

Union Pacific Corp. is the largest U.S. railroad.

Berkshire listed its five-largest holdings in its annual report in February as USG Corp., Washington Post Co., Moody's Corp., White Mountains Insurance Group Ltd. and American Express Co.

Shares of Omaha, Nebraska-based Berkshire Hathaway's Class A stock rose $299 to $108,849 on April 5. Class B shares fell $3 to $3,626.

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net.

Last Updated: April 7, 2007 16:28 EDT