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Warren Buffett Discloses Position in Lee Enterprises, Unwillingly

June 06, 2012 | About:
Warren Buffett’s investment company Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) disclosed its position of 1.6 million shares in Lee Enterprises (NYSE:LEE). This position is worth $2.1 million as of March 31, 2012.

Berkshire intended to keep the position confidential initially. But his request to keep it confidential was rejected by the SEC. Berkshire disclosed this position yesterday.

Lee is a provider of local news, information and advertising in primarily mid-size markets, with 48 daily newspapers and a joint interest in four others. It owns nearly 300 specialty publications in 23 states. In the latest shareholder meeting, Buffett said that the local newspaper will do okay in the digital age. He also bought newspapers from Media General (NYSE:MEG) lately. The stock of LEE closed yesterday at $1.15. It has lost 95% of its market value over the past five years. The stock is up more than 30% today.

In the past, Warren Buffett had kept positions while he was accumulating them confidential. He did this with Burlington Northern and IBM (NYSE:IBM). Eventually Berkshire bought all of the shares of Burlington Northern. Today LEE has a market cap of only $58 million, which is extremely small compared with the other investments Warren Buffett usually makes. Since Buffett tried to keep it confidential, it is conceivable that he will continue to buy the shares.

To learn more about LEE, please read History of Lee Enterprises - Buffett Is a 4% Owner of My Newspaper Company.

Apparently LEE is a cigar butt investment that Buffett does not do that much of these days. What drives him to buy newspapers now? Is Buffett Way off Base on Newspapers?

Rating: 2.5/5 (8 votes)


Invisiblehand - 3 years ago
Any thoughts on what is going on here? This is so odd that BRK would even bother with a $2.1 million position of such a small company by their standards. Building up a position to what $25 million? Even though there are significant "assets" on the balance sheet, I would think it would at least be an all or none acquisition situation. Maybe a pet project. I hope Warren is not losing it ;)
Kfh227 premium member - 3 years ago
Buffet already has convertable debt on LEE. That comes with a 13% yield. I think that if hte debt play fails he wants a backup. And that is owning a company that generates more in FCF in one year than its current market cap.
Invisiblehand - 3 years ago
I did not know he owned the debt. Thanks for the info. That makes more sense. Maybe trying to get more leverage on the current management to protect his investment.
Max7777 premium member - 3 years ago
Why is this even remotely relevant, he made a 2 million dollar investment in a 75 billion dollar portfolio. That means Lee represents 0.000026 % of his investment portfolio. it basicly represent a $266 investment for a 10 million dollar portfolio.. Knowing that he is a smart man and investor do you truly think this investment even matters to him? It was most probably done by someone else in his office..

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