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Jonathan Yates
Will The New York Times be The Last One Standing?

In a recent post on this site, “Are Newspapers Yesterday’s News as Investments?,” it was detailed how the newspaper industry was in turmoil, with valuations of major publishing companies crashing.  The recent sales of The Washington Post and The Boston Globe at bargain basement prices certainly seems to confirm the thesis of that headline.  But The New York TImes Company (NYSE: NYT), the publisher of The New York Times, is up more than 40% for 2013.

Warren Buffett, considered by many to be the greatest investor in history, has investments in more than thirty newspapers.  But Buffett, who used to be a newspaper delivery boy and is worth over $50 billion, does now own any of the stock of The New York Times.  As Buffett has stated that it is better to invest in an excellent company at a fair price rather than a fair company at an excellent price, is he missing out by not owning stock in “the newspaper of record”?

The recent performance of the stock of The New York Times Company certainly says that he is!

Over the last year, The New York Times Company is up almost 60%.  In just the last quarter, it has risen about 30%.  The last week alone has witnessed almost a 2% gain.

In terms of the balance sheet and income statement, there is certainly a Buffett-type appeal.

According to Carol Loomis, who just wrote the book, “Tap Dancing to Work,” about Warren Buffett and his outlook, return-on-equity is very important for a company.  With a return-on-equity of 36.70%, that book can certainly be checked for The New York Times Company.  Wal-Mart (NYSE: WMT), a major Buffett holding, only has a return-on-equity of 23.40%.

Buffett is a value investor who likes to buy at a discount.  The New York Times Company offers that feature, too.  The price-to-sales ratio is 0.91.  That means that every dollar The New York Times Company generates in sales is going at almost a 10% discount in the stock price.

But Buffett is hardly alone in not being bullish on The New York Times Company.

At present, there is a short float of 13.85%.  A short float of 5% is considered to be troubling for a company.  With so many betting against The New York Times Company stock, it appears as if many are expecting it to return to price levels like those for The Boston Globe and The Washington Post.


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