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KFR - FFH holds 13.5 Million of 79 million shares

 

What a horror show.  With alot of FFH investments I see some upside going forward such as ICO, MB, MTL, ABH, Brick but this one leaves my head scratching.  Book value is imploding at 30 M a quarter.  If it gets cheaper than its real estate value I might be interested.  They have some decent media properties but are so badly managed..... arghhhh.  The Atkinson trust needs to convert their b shares to common, let someone come in and take the whole business over and fix it properly.  A horror show.  The Guardian came to my door on Wednesday with no advertising to speak of.  I can get a Toronto Star nearly anywhere any day free of charge while the Globe and Mail raises their Saturday rate to $3.00.

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I do not own this name however the Harlequin business stand alone value is probably greater than the whole company mkt cap now which means Mr Mkt. is putting a negative value on their newpaper assets right now. The newspapaer business is brutal , a cyclical down turn on top of a secular downtrend not a pretty place to be. I suspect that FP will disappear this will help some. I wonder when some large city daillies make the decision to stop publishing a paper edition and go entirely electronic.

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I wonder when some large city daillies make the decision to stop publishing a paper edition and go entirely electronic.

 

Seattle Post Intelligencer did this a few months ago, continuing with much smaller staff running a website only paper.

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  • 6 months later...

On March 2, TD Waterhouse put Torstar on their Action Buy list with a target of $10 Canadian citing its focus on community newspapers and a possible cyclical recovery in newspapers coming out of recession.   It does have other businesses like Harlequin romance novels, but overall has been extremely disappointing over the last few years and I would not be holding my breath for a recovery.

 

The market appears to be more excited than I am.  See: "Torstar shares leap by double digits" at:  http://www.financialpost.com/news-sectors/story.html?id=2633642

 

Cheers

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There's still too much competition in major Canadian markets like Toronto.  The Star is carving the market up between itself, the Sun, the Globe and Mail, and the National Post.  It would be helpful if the Post would simply give up the ghost.  However, with four major participants, suddenly the economics become pretty grim even in a town of 5 million people.

 

Montreal is even worse with the Gazette, Le Devoir, La Presse, and Le Journal.....plus the Globe and Mail and the National Post for those who want a business-oriented paper.  All of these papers are hammering the same market of about 3 million people.

 

How does anybody ever make money in a fractured market like this?

 

SJ

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There's still too much competition in major Canadian markets like Toronto.  The Star is carving the market up between itself, the Sun, the Globe and Mail, and the National Post.  It would be helpful if the Post would simply give up the ghost.  However, with four major participants, suddenly the economics become pretty grim even in a town of 5 million people.

 

Montreal is even worse with the Gazette, Le Devoir, La Presse, and Le Journal.....plus the Globe and Mail and the National Post for those who want a business-oriented paper.  All of these papers are hammering the same market of about 3 million people.

 

 

How does anybody ever make money in a fractured market like this?

 

SJ

 

 

Some hope that Internet only editions is the way to go, but a recent study of NYT subscribers revealed that readers of the online edition spent only 2% as much time there as readers of the ink on paper edition.  Buggy whips, anyone?

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  • 4 years later...

Some hope that Internet only editions is the way to go, but a recent study of NYT subscribers revealed that readers of the online edition spent only 2% as much time there as readers of the ink on paper edition.  Buggy whips, anyone?

 

The 2% number does not surprise me at all. I've noticed that I generally look over news websites (and other sites) very quickly, whereas I'll spend quite a bit of time purusing and reading articles in a physical paper. It's much more rewarding depsite getting the same information. Humans are fascinating.

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Can anyone make the bull case for Torstar?

 

Uhm No.... another head scratcher. 

 

Remember the days when the Sunday Star rolled up looked like a tree stump.

 

People still buy the paper but much less.  Perhaps the purpose is to control the newsprint contract to assist that other buggy whip Resolute. 

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Some hope that Internet only editions is the way to go, but a recent study of NYT subscribers revealed that readers of the online edition spent only 2% as much time there as readers of the ink on paper edition.  Buggy whips, anyone?

 

The 2% number does not surprise me at all. I've noticed that I generally look over news websites (and other sites) very quickly, whereas I'll spend quite a bit of time purusing and reading articles in a physical paper. It's much more rewarding depsite getting the same information. Humans are fascinating.

i haven't read a paper in years. sometimes if its on the table, i look at the page that is visible, but that's it.

 

i don't know anyone around my age, who has a subscription or reads newspapers in paper form routinely.

 

when i read news online, i shop around. i might read one or two articles at paper 1, then move on to the next one and see if they have anything that interest me. if i was a subscriber, i'd just read the one paper and give them all my news money.

 

i also use adblock on news sites that use misleading headlines etc to fish for clicks. publications that get my respect get to show me ads too. i wouldn't pay for an online paper right now, but that might change if only the bad ones are free to read.

 

this is just me wondering why anyone invests in these things. i see them getting an increasingly smaller piece of the pie in the future. anybody can write, and most of the real journalists have already found something else to do for a living. the papers around here are mostly just (badly) translating AP and reuters stuff.

 

p.s. only thing i feel like i'm missing out on is ads from local businesses! not news, but advertisements! i always hear about sales etc from someone old who still reads the paper.

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I took a quick look at the financials last night. Looks like the book business is worth the current valuation and you are getting the paper business for next to nothing.

 

Torstar is perhaps the most valuable newspaper in Canada. Although the newspaper industry is currently in flux as the delivery methods are changing, there will always be demand for news.

 

No bulls here?

 

Can anyone say why Prem (and Francis) like the stock?  That is, you might disagree with their reasons, but what is their thesis?

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I am super disappointed how they sold Wells Fargo, JNJ and USB but adding to their position in a sub par business.  Prem really needs a Munger on staff to convince him to focus on high quality businesses...

 

Tks,

S

 

Does Klarman need to become more like Buffett? What about a Schloss? Should he have been more like Buffett too? I'm really surprised by these kind of comments. Prem has a phenomenal track record using a more Graham-esque type approach with occasional macro hedging. Why would we want him to change that? There's nothing to suggest he'd be better at employing a Buffett like approach.

 

Paying up for quality like Buffet does requires exceptional business acumen and a deep understanding of multiple businesses/industries to understand where the earnings picture is going. I'm not saying doesn't have this ability, but it's not just a switch you can flip on and become less Graham and more Buffett. Prem has been extremely successful with his approach. Let's leave the man to it.

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I "fed the fish while they were hungry" with this one.  I had opened a position shortly after reading the Berkshire 2012 letter while also noticing the holding in Chou's portfolio. Norm's recent question forced me to go back and review the company's progress over the past year. What created the most concern for me was what I perceived as ongoing secular decline at Harlequin, which I thought would have had a better moat than the newsgathering side. I'm also a bit concerned about management's capital allocation skills.

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These are tough investments. Whenever something is experiencing some secular decline you are in for a rough ride. You may make a double or more but, the headaches that come with it... I have had my share of them.

 

I was just reviewing some stocks this week-end and looked at companies like Magna. A 10 bagger since the 2008-2009 crisis. That is a stock that always had a net cash balance and no sign of secular decline whatsoever, actually the opposite. If the world did not end and cars were to be sold again, this was a great place to be.

 

CCL Industries, doubled its earnings in two years in the quite boring: labels and specialty packaging industry. The stock has simply exploded. Growth in earnings combined with decent P/E expansion.

 

Leon's Furniture keeps getting better every year. It was very smart for Watsa and team to buy into The Brick.

 

By the way, I did not own any of these stocks. What I wanted to highlight is that paying a good price is the start but, if the business is also growing then that is where big money is made. And these are not Coca-Cola type stocks. They are boring with average margins but, well managed and their service or product is in demand.

 

Cardboard

 

 

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  • 2 weeks later...

My hometown newspaper serves a market of about 30,000 people. Based upon the amount of advertising, it is thriving. If one wants to know what's happening in our town, one has to read this paper because the news is covered by no other source.

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  • 3 weeks later...

Another "dumb investment" turns golden for Watsa, with the sale of Harlequin to News Corp for 80% of Torstar's market cap. It won't move the needle at Fairfax, with 18 million shares, but with TS.B shares up .85 today, it's still $15 million.

 

Now the question is,  are Torstar's remaining media assets (primarily the Toronto Star and the Metro commuter papers and about 100 regional newspapers) worth $150 mn? They had $75 mn in operating profits in 2012 (a loss last year with a $95 mn write-off), so this may be a cigar butt that doesn't need to give many puffs to be worthwhile.

 

DTB

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Now the question is,  are Torstar's remaining media assets (primarily the Toronto Star and the Metro commuter papers and about 100 regional newspapers) worth $150 mn?

 

How much is their land worth?  Probably a good fraction of that $150m...

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