In His Annual Letter, Buffett Plays Up Newspapers

Recently, Warren Buffett, who is the CEO of Berkshire Hathaway (BRK.A and BRK.B), released his company’s annual report. As a “contrarian investor,” he has revealed that his company acquired 28 newspaper companies throughout the past 15 months. Although newspaper publishers have been a questionable market in the past, Buffett sees potential in this niche. He believes that newspapers that deliver to a tightly knitted community and have developed websites will prosper. Not only did Buffett acquire newspaper publishers, but he also acquired the well-known ketchup brand, H.J. Heinz for $23.6 billion. Reports also reveal that his company earned a net income of $14.8 billion last year, which is an improvement from 2011. These acquisitions are useful signals for investors who believe in Buffett’s business strategies. However, the company’s book value was lower than Standard & Poor’s 500-stock index last year.

Several years ago, Buffett announced that he would not purchase newspapers because of their lost in value. However, since Buffett has spent $344 million on newspaper firms, there may be new potential in this market. This conglomerate’s value may also increase due to the Buffett’s confidence in niches that have been ignored by many investors. Once again, Buffett is the “contrarian investor” who invests against the crowd.

Written by: Melody Mark

Source: NYTimes
http://dealbook.nytimes.com/2013/03/01/buffett’s-annual-letter-plays-up-newspapers’-value/?ref=todayspaper

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