Warren Buffett and his cohorts at Berkshire Hathaway may be down on newspapers, but one investor thinks the sector--or, more specifically, one company--is still a worthy pick.
Ariel Investments Chairman and CEO John W. Rogers Jr. is urging investors to "swing for the fences" during this downturn in a column he wrote for Forbes.com.
Rogers admits Ariel made some "big mistakes" in the media business, including heavying up on bankrupt Journal Register Co.--calling that move a "disaster." But he is bullish on Gannett. "The pessimism has gotten out of hand," he writes.
"I am well aware that newspapers are suffering a deep secular decline as advertisers flee traditional media for cheaper, easily measurable advertising on the Web," Rogers adds. "But remember that a significant amount of the drop has been because of the troubles of automakers and home sellers."
What is else is attractive about Gannett? Its strong properties and the fact GCI is selling for one times trailing earnings and three times expected 2010 earnings. In 26 years I cannot remember such an opportunity to invest at historically low levels in companies that are generating cash flow, earnings and real profits."
Ariel Investments recently exited its position in McClatchy Co. It held roughly 18 percent in the Sacramento-based company but sold is stake because McClatchy's market capitalization fell below the range Ariel preferred.
Shares of GCI were trading up this morning around 2 percent to $4.88.