That's why they're analysts and he's Buffett

Sell-siders scratched their heads when in May 2012 Berkshire Hathaway (BRK.A, BRK.B) agreed to buy 63 newspapers for $142M from Media General (MEG -1.3%), and provide $445M in loans to the company. Was The Oracle's love of newspapers interfering with his business judgement?

It turns out Berkshire received 4.65M "penny warrants" as part of the deal which it exercised in September 2012 - the stock's about a 5-bagger since, and Berkshire's 17% stake is worth $105M. Buffett could sell today and recover most of the $142M paid for the newspapers while still owning them.

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Comments (13)
  • warren white
    , contributor
    Comments (10) | Send Message
    How often does a value investor like Buffet sell when he make's a buy like MEG?
    2 Jan 2014, 12:54 PM Reply Like
  • fredo5697
    , contributor
    Comments (60) | Send Message
    So getting "most of" your money back and owning newspaper co's is classified as a success now??
    2 Jan 2014, 01:22 PM Reply Like
  • drew111
    , contributor
    Comments (514) | Send Message
    Looking at it from a slightly different perspective, would making almost an 100% gain on an investment in a year and a half be considered a success now? I know Buffett thinks that is a success. Perhaps you do not and we should all stop following Buffett and start following you. No malice intended, just being a smart a**! lol
    2 Jan 2014, 02:09 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1597) | Send Message
    Yes. Getting 142 million worth of newspaper businesses (which by the way are very much cash flow positive) for free is a big success. If you do not believe so, please buy a cash flow positive newspaper and give it to me for free.
    2 Jan 2014, 03:01 PM Reply Like
  • Kospi
    , contributor
    Comments (415) | Send Message
    He's worth $60 billion, Fredo, made from scratch. How much are you worth?
    2 Jan 2014, 04:44 PM Reply Like
  • fredo5697
    , contributor
    Comments (60) | Send Message
    Not quite that much but Mr. Buffett's got a few years on me. Give me time!:) Not doubting the Oracle. Just wanted to get some reaction. Much respect!
    3 Jan 2014, 09:44 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11311) | Send Message
    It's all about how the deal is put together.
    2 Jan 2014, 01:41 PM Reply Like
  • CLUB 198
    , contributor
    Comments (105) | Send Message
    Again....I NEVER bet against Warren
    2 Jan 2014, 02:05 PM Reply Like
  • soccerref
    , contributor
    Comments (25) | Send Message
    All the papers, WB purchased are in small markets (if he buys the Chicago Tribune that's another story). They have little competition, the digital media can be managed and BH Media is linking them digitally to reduce overall costs. Remember he's been a Board member of the Washington Post since Kathryn Graham's early years as a publisher. He learned from the best. He didn't like the box so he's changing the box. Anyway, the papers are a trivial percentage of overall gross and net sales. (Remember BH spins off over $2 billion a month is free cash).
    2 Jan 2014, 03:58 PM Reply Like
  • Darbyred
    , contributor
    Comments (249) | Send Message
    While most of the newspapers are in small markets, the Richmond Times Dispatch is not a small market.
    2 Jan 2014, 04:55 PM Reply Like
  • combatcorpsmanVN
    , contributor
    Comments (1356) | Send Message
    The best research is never published -- this episode is proof-positive. Compare WEB's moves w/ the 50 recommendations per episode of Cramer's Circus on CNBC. Or, the "send me your money" SA authors pretending to know what's the best moves in the markets/equities.
    2 Jan 2014, 05:40 PM Reply Like
  • Lawrence Garfield
    , contributor
    Comments (4) | Send Message
    A wise lesson from the master...always ask for a kicker.
    2 Jan 2014, 07:57 PM Reply Like
    , contributor
    Comments (103) | Send Message
    This "dealmaking" instinct of WEB is integral to BH's success. Much like Steve Jobs and Apple.
    As a long-term BrkA holder, with Warren's well-known preferred holding time of "forever", I just
    hope that some of that DNA gets transferred down to the next generation of managers of BH.
    I remember Warren's remark several years ago when asked about possible successors-
    "Well, there's always Charlie!"
    3 Jan 2014, 10:35 AM Reply Like
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