Mr. Buffett Goes to Washington
Issue 23| 1973 Part 1 - Warren Buffett Invests in The Washington Post Company
Welcome to issue 23! As I wrap up Kay Graham's autobiography, Personal History, I came across a letter written by Warren Buffett in 1973.
In this letter, Buffett informed her that Berkshire Hathaway had purchased more than 230,000 Class B shares of the Post. Kay, the publisher and CEO of the Washington Post, jokingly addresses the letter as the "Dear Ms. Graham" letter.
Enjoy!
This purchase represents a sizable commitment to us—and an explicitly quantified compliment to the Post as a business enterprise and to you as its chief executive. Writing a check separates conviction from conversation. I recognize that the Post is Graham-controlled and Graham-managed. And that suits me fine.
Some years back, a partnership which I managed made a significant investment in the stock of Walt Disney Productions. The stock was ridiculously cheap based upon earnings, asset values and capability of management. That alone was enough to make my pulse quicken (and pocketbook open), but there was also an important extra dimension to the investment. In its field, Disney simply was the finest—hands down. Anything that didn't reflect his best efforts—anything that might leave the customer feeling short-changed—just wasn't acceptable to Walt Disney. He melded energetic creativity with a discipline regarding profitability, and achieved something unique in entertainment.
I feel the same way about The Washington Post. The stock is dramatically undervalued relative to the intrinsic worth of its constituent properties, although that is true of many securities in today's markets. But, the twin attraction to the undervaluation is an enterprise that has become synonymous for quality in communications. How much more satisfying it is going to be to watch an investment in the Post grow over the years than it would be to own stock in some garden variety company which, though cheap, had no sense of purpose.
I am additionally impressed by the sense of stewardship projected by your communications to fellow shareholders. They are factual, complete and interesting as you bring your established newspaper standards for integrity to the newer field of corporate reporting.
You may remember that I was in your office about two years ago with Charles Munger, discussing the New Yorker. At the time I mentioned to you that I had received my financial start delivering the Post while attending Woodrow Wilson High in the mid 1940's. Although I delivered about 400 Posts per day, my record of loyalty is slightly tarnished in that I also had the Times-Herald route (much smaller—my customers were discriminating) in the Westchester. This was perhaps the first faint sign to keenly perceptive Washingtonians that the two organizations eventually would get together.
I should mention that Berkshire Hathaway has no radio or television properties, so that we will not be a complicating factor with the FCC. Our only communications property is the ownership of Sun Newspapers of Omaha, a group of financially (but not editorially) insignificant weekly newspapers in the metropolitan Omaha area. Last month our whole organization, seventy people counting printing, went into orbit when we won a Pulitzer for our reporting on Boys Town's undisclosed wealth. Incidentally, Newsweek and Time used approximately equal space in covering the story last year, but Newsweek's reporting job was far superior.
You can see that the Post has a rather fervent fan out in Omaha. I have hopes that, as funds become available, we will add to our holdings, at which time I will send along amended 13-D filings.
Cordially,
Warren E. Buffett.
Becoming Berkshire 1930-1972:
Issue 22| 1972 Part 2 -The Nifty Fifty
Issue 21| 1972 - See's Candies
Issue 20| 1971 Part 3- The Nixon Shock
Issue 19| 1971 Part 2- Supermoney
Issue 18| 1971 Part 1- The Dean & The Disciple
Issue 17| 1970 Part 2 - Blue Chip Stamps
Issue 15| The Go-Go Years of the 60s
Issue 14| 1969- Part 2 Illinois National Bank
Issue 13| 1969 - Part 1 Buffett Retires
Issue 12| 1968 - Sun Newspaper & Blacker Printing Company
Issue 11| 1967 Part 2 - National Indemnity
Sabre Arc Portfolio Updates:
March 2025 Review: $1,174,370.03
December 2024 Review: $1,209,486.84
November 2024 Review: $1,214,498.45
October 2024 Review: $1,132,767
September 2024 Review: $1,137,009
You are a middle-aged woman raising and caring for your children, while your husband creates and develops a major media company.
Then, overnight, your husband commits suicide, and you, in addition to raising and caring for your children, take the reins of this major media company.
Against all odds, you are surprised that one day an unknown investor named Warren Buffett from Omaha wants to invest in your company because he sees value in it.
He invests in your company and mentors you, teaching you how to be a great CEO and capital allocator.
The rest is history.