Buffett has invested more than 100 newspapers in nearly a year: reason or emotion

Liu News is the main source of the newspaper, and recently many newspapers themselves become the biggest news, they can't go on. From 2008 to 2010, 8 major newspapers in the United States were declared bankrupt, dozens of city newspapers closed, and some newspapers were forced to stop printing editions for online publishing, according to a newspaper study from Congress.　　The reason is simple, the network is now the main source of people's browsing news, leading to a substantial reduction in advertising revenue. At this time, Buffett is buying newspapers: Berkshire has only had one daily in the past 35 years, the Buffalo News, a 1977-year takeover. He bought the World Herald of Omaha in his home town in December 2011. In May this year, he announced a $142 million trillion in 63 newspapers for Media General, and now buys "Bryan-college redevelop Eagle" and the Waco Herald Tribune. In the first quarter of this year, Mr. Buffett also bought 2.1 million dollars from Lee Enterprises, 48 small and medium-sized newspapers.　　Overall, Buffett has invested 115 newspapers in less than a year.　　In the newspaper industry a depression a sad song, Buffett is bucking the trend to buy more than 100 newspapers, is emotional, or rational?　　There is no doubt that Buffett, who has been delivering newspapers since the age of 13, has very deep feelings for the newspaper, but the most successful investment guru has always been a great emphasis on rationality, he predicted the decline of newspapers 20 years ago, but the recent plunge in the price of newspaper purchases has greatly improved the cost-performance of newspaper investment and entered the safe zone of Buffett's investment.　　First, Buffett's feelings about the newspaper: do not invest in a journalist. "I love newspapers all my life and I will always love them," Buffett said.　　He once said that he would be a journalist in this life without investing. Buffett's life is the first bucket of gold, from the delivery of newspapers. He started delivering newspapers at the age of 12, getting up every day, and sending 500 newspapers.　　As a result, the student earns more money each month than his teacher. Buffett's investment in the first bucket of gold, also from the newspaper.　　1973, Buffett bought the "Washington Post" 1.02 million U.S. dollars, has been held until now, up to 40 years, the end of 2004 to increase the market value to 1.698 billion U.S. dollars, 30 investment profit of 1.687 billion U.S. dollars, made 160 times times. The chief source of Buffett's investment is the newspaper, which reads 5 newspapers a day.　　He even asked the postman to send the Wall Street Journal to his home at night, and he sometimes waited for the newspaper until midnight.　　Second, Buffett's 20 prediction: Newspapers are heading for a decline. 20 years ago, in a 1991 letter to shareholders, Mr. Buffett analyzed the shift in the economic prerogatives of media companies from strong to weak: "The economic competitiveness of media companies has been aStraight is very strong, but now continues to be seriously eroded. "The fact is, newspapers, television and magazines, the media companies, in their economic behavior began to become similar to ordinary enterprises, but no longer economic privileged enterprises." Let's take a quick look at the distinguishing features of economic privileged enterprises from ordinary ones, but remember that many are in between, so the most appropriate description should be the weaker economic privileged or the mighty general. "" An economic privilege comes from a product or service that has the following three characteristics: (1) The customer really needs or expects to be, (2) the customer considers that there is no substitute that is very similar to it, (3) is not subject to government price control. Products or services with the above three characteristics, it will be reflected in the company has a regular product and service to attack the ability to price, so as to achieve higher investment capital yield. Moreover, economic privilege can tolerate mismanagement of the wrong. Unsuitable managers, while reducing the profitability of economic privilege, do not cause fatal damage. "" In contrast to economic-privileged companies, ' ordinary companies ' want to get far higher than average yields, only to become low-cost operators, or to catch up with the market is very tight supply serious shortage of good times. But this lack of supply usually does not last long. Through Super-class management, a company may continue to maintain the status of low-cost operators for a considerable period of time, but even so, or continue to face the possibility of competitor attacks. Ordinary enterprises, unlike economic privileged enterprises, will be completely destroyed by bad management. "Until recently, media companies had three characteristics of economically privileged businesses, so they were able to make aggressive pricing and tolerate loose management," he said. But now consumers are looking for information and entertainment (their main interest is the latter), and there is a wide range of options available for information and entertainment sources. Unfortunately, consumer demand does not grow as the new supply grows: 200,000,005 Americans, 500 million eyeballs, or 24 hours a day, there is no way to increase demand. The upshot is that competition between information and entertainment providers becomes more intense, and the market is fragmented, so that the media industry loses the competitiveness of some of its economic privileged businesses, albeit far from all.　　"Third, Buffett's abrupt change in the last 3 years: from adamant about not buying a newspaper to buying a lot of newspapers." At the 2009 shareholder meeting, Buffett said: "For most American newspapers, we will not buy them at any price." After 3 years, Buffett began to buy a lot of newspapers.　　From adamant not to buying, to buying a lot, what makes Buffett make such a big change? The reason for not buying is simple, the newspaper's competitive advantage sharply weakened, resulting in a sharp decline in valuations. Buffett had a clear understanding of this point 20 ago: "The media industry's economic privileges from strong weakened, immediately directly affect the media enterprises short-term profits, but the media enterprises of the intrinsic value ofThe impact is far greater than the impact on short-term profitability. In the past it was also the proceeds of a piece of money, and the stock buyer's valuation of a chunk of the company's earnings was much higher than that of steelmakers because they expected earnings from media companies to continue to grow (and shareholders did not need to invest more capital in the growth of earnings), And the profits of steel companies are clearly those around the normal level of profitability fluctuations in the enterprise type. "However, now the market for the media companies are expected to profit from the normal profit level fluctuation of the enterprise type." As the simple example we have outlined earlier, the correction of profit expectations will inevitably lead to a dramatic change in valuations. "Buffett now buys a lot of newspapers, not just for emotion, but for rationality," he said. Since the prices of media companies have fallen sharply in the last 10 years, many media stocks have fallen to only one-tenth of the original share price, far exceeding their intrinsic value, and investment attractiveness has become much more attractive. Buffett's investment in the Washington Post has halved in the 5-year period since 2007. The New York Times has fallen more than 70% since 2007, 5 years ago. The shares of Mr. Buffett, the media General that bought his 63 newspapers, were only 1/10 5 years ago.　　Lee's share price is only 1/20 5 years ago.　　And we should note that Buffett is not focused on the acquisition of the national newspaper, but the community of small and medium-sized newspapers. Buffett's investment logic is that community newspapers have more stable economic privileges: "Despite the great changes in the fundamentals of newspapers since I acquired the Buffalo, I believe that newspapers that focus on the news of their communities will have a good future ... No one stops halfway through reading a story about themselves or their neighbors. "Berkshire is likely to buy more newspapers in the coming years," he said. We prefer small-town newspapers or city newspapers that have a strong sense of community, similar to the 26 newspapers we're going to run. If citizens are indifferent to their communities, they will eventually not care about the newspapers in their communities. Generally speaking, the interest in community affairs is inversely proportional to the size of the population, but to the number of years of residence in the community. As a result, we will focus on small and medium-sized newspapers belonging to a long history community. "In the aftermath of the financial crisis, the U.S. newspaper industry has continued to slump. But local newspapers seem to be better off than national newspapers. According to the National Newspaper Association, advertising revenues for nationwide and local retail newspapers in 2011 were 3.8 billion and 11.9 billion respectively, down 50% and 46% respectively from 2006. The advertising revenues of local newspapers are much higher and incomes are falling at a lower rate.　　The customers of the community newspaper are more viscous and loyal, which is the main reason why Buffett only buys regional newspapers. It should be noted that Buffett said he bought the newspaper for a long time, so Buffett's approach is not necessarily suitable for those who want only a few years or shorter investors: "I do not believe that they will continue to lose money, I will not spoil the shareholders。 "Buffett said in an interview with The Washington Post that he was investing in newspapers not out of emotion but in reason:" I am not investing in newspapers because of Pillory's business decisions, which will not contribute much to Berkshire's profits in the future. If this is a company that produces trinkets, I will never invest. While the profits we get from our newspaper assets will be a small fraction of the profits we get from the Burlington Railway, it is certainly not a foolish decision from the financial point of view of the return on investment. ”