When the "smart money" starts buying an investment, it's the
most accurate buy signal that you'll ever see.
There has been a flurry of acquisition activity in one of
America's most troubled industries. Now it's not uncommon for
companies with financial woes to find themselves on the auction
But it is pretty strange and uncommon when three famous
billionaires ALL buy similar assets within a few weeks or months
of each other. But that's exactly what's happening in the
business of newspapers today.
When this type of thing happens, it's worth paying attention
The common view today is that newspapers are a dying
business. There are plenty of reasons to dislike
newspapers: declining print circulation, a classifieds business
that's been crushed by CraigsList, challenges transitioning to a
profitable online business model - and more.
But despite these well-known headwinds, three of the richest
men in the world just entered the newspaper business in a big
way. All are self-made businessmen who have built their
fortunes outside of the world of journalism and the media. Yet,
all three are considered among the best and most talented in
their line of work.
The first is Illinois native John Henry, who made his fortune
trading corn and soybean futures. His winning investment strategy
helped him build a thriving hedge fund business with $2.5 billion
Henry is a sports fanatic hedge fund manager who owns the
Boston Red Sox, a team that won the World Series in 2004 and
2007. He also owns the highly prized New England Sports Network
television station, valued by Forbes at $600 million.
The second is Jeff Bezos, the founder of
and the most successful Internet entrepreneur ever. The
former New York investment banker built his online bookstore into
the biggest e-commerce company in the world, earning a $25
billion fortune along the way.
And finally there is Warren Buffett, the down to earth Omaha
native who in 1962 began buying up a sizable stake in a small
Rhode Island textile company called
Berkshire Hathaway (NYSE: BRK-B)
. His investment prowess and value investment approach has led to
one of the greatest investment success stories of all time.
He's now the 4
richest person in the world, with a $53 billion fortune.
Within the last week, two of the best-known east coast
newspapers were sold to these iconic billionaires.
Just last weekend, Henry agreed to buy
The New York Times (
in a $70 million transaction. The purchase price was far
below the $1.1 billion that the
paid for the paper in 1993, back in the glory days of print.
That transaction was followed just two days later by the sale
The Washington Post
to Jeff Bezos. Amazon's founder will personally purchase
the company for $250 million.
Both Bezos and Henry are astute and proven businessmen. But
the foray into the newspaper business is new for both of them.
Their motives for buying newspapers are likely different.
Henry is purchasing
The Boston Globe
to add to his regional sports and media assets in New England.
The Washington Post
could have synergies with Amazon and allow Bezos to revolutionize
the news journalism industry from the inside.
These billionaires are signs of smart money investors entering
the downtrodden newspaper business. However, it's the
actions of Warren Buffett that really indicate a bottom.
And that's because Buffett has been in the newspaper business for
years, and has become especially active buying up papers
In tomorrow's issue of
Income & Prosperity,
I'll tell you exactly why Buffett has been on a buying spree
recently. And I'll share an important lesson that every
investor can learn from these billionaires.