Following in the greatest of capitalist traditions, the Oracle of Omaha announced plans to buy up the shares he doesn’t already own in one of the country’s biggest railroads, Burlington Northern Santa Fe. And in an egalitarian, if unexpected, move, he said he would split his Class B stock to the tune of 50-to-1, making it possible for just about anyone to own Berkshire Hathaway’s traditionally lofty shares.

The railroad purchase is a bet on the future of America, Buffett said, and it’s his biggest acquisition ever. It values the railroad at $34 billion, and the price of $100 a share is a premium of nearly 32 percent. The premium vaults the railroad into the top spot by market cap, surpassing Union Pacific.

Buffett also owns stakes in other railroads, so it will be interesting to see if his move stirs any antitrust comments from Washington. Idiomatically, there is something profoundly rural in the Americana of Buffett’s latest bet; much more so than Berkshire Hathaway’s mainstay insurance business.

Warren Buffett knows sweets. His Berkshire Hathaway is the largest shareholder in Kraft Foods, which made an unsolicited — and rebuffed — $16 billion bid for Cadbury. The Wall Street Journal reported that the trust that holds voting control of Hershey has hired Buffett’s favorite banker, Byron Trott, as it also weighs whether to pursue the British chocolate maker.

Trott, a former Goldman Sachs banker who runs his own firm now, is known for his expertise in candy as well as in advising family- and trust-owned companies. He convinced Buffett to pay $6.5 billion to help finance Mars in its $23 billion takeover of Wrigley last year.

Paritosh Bansal and Jessica Hall report that while Trott’s latest engagement may not have anything to do with Buffett, he may end up helping the billionaire investor. Sources previously told Reuters Hershey is unlikely to make a bid on its own for all of Cadbury. But Hershey may want to pick up pieces of Cadbury, which makes Dairy Milk chocolate, Halls cough drops and Trident gum. This could bode well for Buffett, some investors said.

Cadbury shareholders could get better value and Kraft may not have to pay up for a deal if a third party values some pieces of the British company more than what it is worth in its entirety to Kraft, these experts said.

Buffett has made no secret of his worry that Kraft may overpay for Cadbury. On Wednesday, he told CNBC that Kraft had “a lot to do” to justify the price offered for Cadbury. He also said investors undervalued Kraft’s stock, so it was using a weak currency to pay full value for Cadbury.

While Kraft may think of itself as that kid in the candy shop, Buffett also knows how and when to say no.

“He hates the practice of CEOs overpaying, particularly with their own stock when it is undervalued,” said James Armstrong, president of Henry Armstrong Associates, which manages some $400 million and owns Berkshire stock. “It’s pretty clear that he doesn’t think it’s a very attractive acquisition at this price.”

It’s also worth noting that Buffett told CNBC that Kraft CEO Irene Rosenfeld has his full confidence. That was sweet of him.

It may have only been about two percent of his holdings in the rating agency, but Warren Buffett’s decision to pare back his stake of Moody’s smacks of capitulation after a Manhattan judge ruled that just because they write opinions does not necessarily afford the much-maligned credit grading industry first-amendment protection.

Buffett‘s Berkshire Hathaway said in a filing it had sold 794,388 Moody’s shares on Sept. 1 and Sept. 2, chiseling its holding down to 39,219,312 shares. This isn’t the first time the Oracle of Omaha has seen fit to shave his share of the rating agency. Many will say these incremental measures are not a signal of a loss of faith in the business. But one could argue that the small sales serve less of a financial purpose than they signal slipping confidence. Even Buffett has said Moody’s damaged its brand by providing inaccurate ratings of SIVs, CDOs, CDSs and ETCs — the acronyms of mass financial destruction in the markets’ meltdown.

U.S. District Judge Shira Scheindlin in Manhattan said ratings on notes sold privately to a “select” group of investors were not “matters of public concern” deserving of traditionally broad protection under the First Amendment of the U.S. Constitution. Shares of both Moody’s and McGraw-Hill, which owns Standard and Poor’s, slid in response.

Buffett may yet sense a brighter day on the horizon once the lawsuits are settled. Bond market investors can’t really do without rating agencies, so any improvements to their ability to spot and give appropriately poor grades to cruddy paper could spark a quick turnaround in rating agencies’ fortunes.

Omaha, Nebraska is always a beehive of activity when devotees flock here for the annual meeting of billionaire Warren Buffett’s Berkshire Hathaway.

Shops and restaurants were doing a brisk trade on Friday. Waiters at La Buvette Grocery and Wine Bar, a bistro in the gentrified old market area, said this week-end is always one of the busiest of the year. The rest of Omaha’s old market was also jamming.

At least one vendor — this one on the outskirts of the city — was looking for more than a good day’s business.

Chops Bowling advertised unlimited hours of bowling fun for just one Class A Berkshire Hathaway share.  
  
To the unititated that might sound like a good deal. But none of the 35,000expected to convene here this week-end for what is referred to by Buffett himself as “Woodstock for capitalists” will be fooled.

Even after falling nearly 40 percent since last September, a single class A share was still worth $92,005 at Friday’s close.

It is said that all that glitters is not gold. Keep that in mind when considering the bidding war heating up the nuclear power business. France’s EDF has offered $6.5 billion for half of Constellation Energy Group’s nuclear business and some other assets, trumping Warren Buffett’s bid of $4.7 billion for all of Constellation.
 
If plummeting demand for everything from new cars to tin foil could fell BHP’s monster bid for Rio Tinto, why wouldn’t it weigh on demand for energy? While nuclear power has regained some favor as a cheap, relatively clean alternative to nasty fossil fuels, is it really safe to expect consumers to ramp up electric heat this winter, and air conditioning next summer, when they are worried about losing their jobs?
 
And today brings more evidence that the lengthy, torturous bid process BHP endured before walking away from Rio Tinto may have saved it from dealing with a disastrous downturn in demand. Freeport McMoran, which bought Phelps Dodge for $26 billion two years ago, slashed its dividend this morning after raising it only four months ago.  
 
Constellation shares rose nearly 20 percent to over $30 this morning, but that is still well below the value of the EDF bid — $52 a share. Perhaps investors aren’t quite so warm and fuzzy toward nukes after all.

* Australia said it is open to a $5.9 billion merger between Qantas Airways and British Airways as long as it’s not a takeover, sending the Australian carrier’s shares up nearly 10 percent.

* A Japanese unit of Prudential Financial plans to bid for two Japanese life insurers put up for sale by American International Group, people familiar with the matter said.

* Investment funds of Wall Street banks Goldman Sachs and Morgan Stanley and private equity giant Bain Capital plan to invest a combined at least $30 million into a Chinese movie distributor soon, top boss of the distributor Poly Bona told Reuters.

* The Irish government said it would consider Ryanair’s new offer to buy rival airline Aer Lingus, in which the state holds a 25 percent stake, but it will be careful to preserve competition.

* Debt-laden Telecom Italia, Europe’s fifth-biggest telecoms provider, will shed assets worth up to $3.82 billion and cut another 5 percent of its workforce in a bid to slash borrowings and trim costs amid a weak economy.

* Two investors in Irish Continental Group said they were in talks about a possible offer for the company, owner of Irish Ferries, reopening a bidding war between competing shareholders with blocking stakes.

* Georgia has sold the remaining 49 percent of its Black Sea port of Poti to RAK Investment Authority of the United Arab Emirates for $65 million, its deputy minister Vakhtang Lezhava told Reuters.

* Government-owned Nakheel Properties, developer of Dubai’s palm-shaped islands, is not in discussions over the sale of company and has no immediate plans to cut more jobs, the chief executive told Reuters.

* Swedish oil and gas group Lundin Petroleum has agreed to sell its 9.2 percent stake in Revus Energy to Germany’s Wintershall, helping to clear the way for Wintershall’s takeover of Revus.

(Reuters photo: Vincent Kessler)

When pressed on why he buys into certain businesses, Warren Buffett likes to say he buys only businesses he understands. 
 
Certainly the $5 billion his Berkshire Hathaway Inc plans to plow into Goldman Sachs preferred stock immediately doesn’t represent an outright ownership stake. So perhaps the second-richest American won’t need to understand as much of what the so-called rocket scientists at Goldman do - which is a whole lot less, now that the bank is going commercial bank and its strategies built over decades are in tatters.
 
Another of Buffett’s truisms is that when the markets turn sour the problems are exposed, “you always find out who’s been swimming naked when the tide goes out,” he told CNBC television in August. “We found out that Wall Street has been kind of a nudist beach.”

He gave himself time to ogle before deciding where to plant his towel. Perhaps even more sexy than Goldman’s business is the stunning premium he’s picking up.
 
For its $5 billion, Berkshire gets preferred stock that carries a 10 percent dividend. It also gets warrants to buy $5 billion of common stock, or 43.5 million shares, at $115 per share, within five years, which could give it a roughly 9 percent stake in Goldman. That’s a paper profit on the warrants alone of $437 million, based on Goldman’s closing stock price on Tuesday.

Other deals of the day:

* Sumitomo Mitsui Financial Group, Japan’s No. 3 bank, plans to invest in Goldman Sachs Group, Japanese media said, in what would be the third big Japanese investment this week on Wall Street.

* French utility EDF launched a 12.5 billion pound ($23.14 billion) agreed bid for nuclear operator British Energy, in a revamped offer to take control of Britain’s nuclear power industry.

* Yahoo Inc’s new board approved a new round of discussions with Time Warner over the future of its AOL unit, the Financial Times said, citing a person familiar with Yahoo’s thinking.

* Japan’s third-largest drugmaker Daiichi Sankyo said its open offer to buy up to 20 percent of India’s generic drugmaker Ranbaxy was oversubscribed.

* An Indian government agency is selling a stake worth roughly $1.2 billion in private sector lender Axis Bank , sources familiar with the situation said.

Companies may look cheap in the newly minted bear market, but Dow Chemical isn’t taking any chances with Rohm and Haas. The $18.8 billion deal at $78 per share is a 74 percent premium to the paint specialist’s closing price of $44.83 on Wednesday. If the deal wasn’t rich enough, buy-in from Omaha oracle Warren Buffett and sovereign wealth fund the Kuwait Investment Authority, in the form of convertible preferred securities for $3 billion and $1 billion, respectively, should drown out any naysayers, though it’s tough to imagine who could challenge the deal. CEO Andrew Liveris is keen to move Dow away from basic chemicals and towards higher margin specialty chemicals. Dow said the deal would be “meaningfully accretive” to earnings in the second year after it closes, with pre-tax synergies expected to be at least $800 million per year.

Novartis plans to buy its research partner, Swiss biotech company Speedel, for about $880 million to speed up development of potential blockbuster blood-pressure drug Tekturna. Speedel shares surged more than 90 percent to the offer price after the latest in a string of big pharma acquisitions of promising start-up drug development companies. Cash-rich major drugmakers have been queuing up to invest in medicines to fill their thinning pipelines — and the biotech sector has been hit by the global downturn in equity markets, fuelling takeover speculation. Shares in Novartis, which is keen to shore up its franchise in treating high blood pressure as its top-selling Diovan faces generic competition when it loses exclusivity in 2012, fell slightly as markets viewed the buy as expensive.

Other deals of the day:

* Canada’s Precision Drilling Trust said it will immediately reapproach U.S. oil driller Grey Wolf with its $10-a-share takeover offer if Grey Wolf’s shareholders vote down a proposed merger with Basic Energy Services.

* Bidders for Rio Tinto’s U.S. coal unit, Energy America, have a deadline of the end of business to lodge interest in the asset, sources familiar with the situation told Reuters.

* Opnext, which makes fiber optic network components, said it agreed to buy privately held StrataLight Communications in a cash and stock deal valued at $172 million.

* Residential Capital, the mortgage lending arm of GMAC, said a GMAC affiliate has agreed to acquire its resort finance business.

* Porsche will be one step closer to acquiring majority control of Volkswagen on Sept. 2, when its deal to buy 4.9 pct of that company’s ordinary shares takes effect.

* Keeley Asset Management, which made its name by selecting small and forgotten companies, said that it took an 18 percent stake in beleaguered money manager Pzena Investment Management.

* Index Ventures, Europe’s best-known high-tech venture capital firm, has bought a small stake in technology online publisher Bestofmedia for 22.5 million euros ($35.4 million) to help it fund acquisitions.

* China’s Hangzhou Trust has agreed to sell a 19.9 pct stake to Morgan Stanley for about 200 million yuan ($29.2 million), the Chinese company’s chairman said.

* Canada’s Cameco and Japan’s Mitsubishi said they will jointly acquire Kintyre uranium exploration project in Western Australia from Rio Tinto for $495 million.

* Steel and coal firm Coal of Africa is unaware of a reported 235 pence-a-share bid from the world’s largest steelmaker ArcelorMittal, Coal said.