Does Warren Buffett's Investment In Flying J Bode Well For TravelCenters Of America?

Shares of TravelCenters of America LLC TA jumped 9.3 percent on Tuesday after Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) announced a new 38.6 percent ownership stake in Pilot Flying J. Buffett’s big buy has traders wondering if there may be further consolidation in the travel center industry in coming months.

Pilot is North America’s largest travel station operator, with more than 750 Flying J and other centers across the U.S. and Canada. TravelCenters of America operates 255 travel centers in the U.S.

Ironically, buying interest for TravelCenters of America could even come from Buffett himself. In the past, Buffett has taken large stakes in several top railroad companies all at once. Today, he owns huge stakes in all four major U.S. airlines and a long list of big banks, including rivals Wells Fargo & Co WFC and Bank of America Corp BAC.

TravelCenter of America’s relatively small $178 million market cap would be easily digestible for Berkshire. Berkshire’s stakes in Wells Fargo and Bank of America alone are worth a combined $44 billion.

TravelCenters of America has had a rough go of it so far in 2017, down more than 35 percent year-to-date. The stock is currently priced at only about 30 percent of book value per share, a price that could make it appealing to a notorious value investor such as Buffett.

Back in May, FBR & Co. Reiterated an Outperform rating for TravelCenters of America and set a $9 price target for the stuck, roughly double the price at which it was trading on Tuesday.

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