The old axiom that differences of opinion make for lively horse race betting and stock markets seems applicable this week for the first time in a long time to battered newspaper company shares.
Slim is known as the Mexican Warren Buffett and not just because he is extremely rich (third wealthiest in the world, according to Forbes). Having made a fortune in telecommunications, he practices the same value investment strategy, originated by Benjamin Graham, of buying unpopular, inexpensive stocks that he thinks have a solid chance to grow or rally.
Buffett had spectacular success with a major investment in the Washington Post Co. soon after it went public in the 1970s. He has cooled on newspapers as an investment the last few years,
telling a questioner at his 2006 annual meeting that the glory years had come and gone because of media fragmentation.
The news wasn't all sunny for newspaper stocks this week. Goldman Sachs analyst Peter Appert issued a report Monday headed, "Just when you thought revenue trends couldn't get any worse..." He wrote that revenue declines at the public companies he follows have hit an "unprecedented" 17 percent year to year in recent months and that the stocks are "value traps" unlike to improve over the next 24 months.
Appert has a sell recommendation on the New York Times stock and reiterated it after the announcement of Slim's stake. He likes both the company's national footprint and its proactive digital strategy but wrote that near-term earnings prospects are still bad.
Appert also has sell recommendations on A.H. Belo and McClatchy.
