Buffett Ups Stake In Lee Enterprises
Earlier this
year, Warren Buffett said he intended to buy more newspaper assets -- and he meant it. This week his investment company, Berkshire Hathaway, almost doubled its stake in Lee Enterprises from 1.7
million shares to 3.23 million shares, according to a report in the St. Louis Post-Dispatch, Lee’s flagship property.
That increases its stake in the company from 3% to around
6%.
The move has sparked speculation that Buffett might be planning to buy a controlling stake in Lee, which publishes 47 daily newspapers and 300 weekly and community papers in
addition to the Post-Dispatch.
Despite a challenging advertising environment, a tumbling stock price and a brief stint in bankruptcy protection, Lee has managed to maintain a margin
of 14%, according to the newspaper, making it an attractive target. However, Lee management said it has so far received no offers or exploratory messages from Buffett.
Buffett
reportedly acquired his initial stake in Lee by buying $85 million of the company’s debt from Goldman Sachs at $0.65 on the dollar in November 2011. Berkshire wanted to keep its ownership of Lee
stock confidential, but was forced to disclose it by the Securities and Exchange Commission in June.
After the disclosure, Lee’s stock increased from $1.15 at the close of business
Tuesday to $1.39. The news that Berkshire increased its holdings prompted another bump, raising the stock price 9.5% from $1.46 on Wednesday to $1.60 at the time of writing.
This is
just the latest in a series of moves by Buffett to increase his newspaper holdings. He acquired 63 daily newspapers from Media General in May for $142 million, and the Omaha World-Herald for
$150 million (plus $50 million in debt) in November of last year.
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