Warren Buffett Story [Part34] Washington Post Strategy

In the last article, we talked about how Warren Buffett made a smart move by buying The Washington Post when it was a great opportunity. Now, let's keep learning how to understand what makes great companies tick and how they can become even more valuable in the future, just like Buffett did.

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Early Success and Unexpected Challenges

We saw that Warren Buffett did really well with his investment in The Washington Post, making 40 times more money than he put in. But why did he decide to do it? Well, he said, 'I was interested in The Washington Post because not many people cared about that business back then.' While others were scared or greedy about different things, he paid attention to something that most people didn't.

Even though things started off well, the two years after Buffett bought The Washington Post were pretty bumpy. The price of the company's stock kept going down, and the value of Buffett's investment dropped from $10 million in 1973 to $8 million in 1974. But Buffett didn't rush; he took his time. The stock price stayed lower than what he paid for it until 1976. But then something big happened: the investment value of the newspaper went up to over $1 billion. This unusual approach is worth looking at closely.

Easing Concerns with Sincerity

At first, Katharine Graham, who owned The Washington Post, was worried about Warren Buffett buying the company. She had big doubts and concerns about what he might do. But Buffett wanted to make her feel better, so he wrote her a sincere letter. He said, 'I think The Washington Post is owned and run by the Graham family. That's enough for me.' He also told her about his own experience when he was young, delivering more than a hundred copies of The Washington Post every day in high school in Washington. He made it clear that he wouldn't do anything to harm the Graham family's position. And it was easy to check because Katharine had control over the important parts of the company through her shares.

Back in 1971, Katharine had met Warren Buffett and Charlie Munger for different reasons, but she wasn't all that impressed with them back then. In her autobiography, "Personal History," she remembered, "At that time, Warren Buffett was just a small-time investor, and hardly anyone knew who he was." She also mentioned that other financial experts had given her advice that made her feel uneasy, like "He won't bring you good results" when talking about Buffett.

However, Katharine didn't just rely on one opinion. She decided to ask her friends who knew Buffett what they thought about him. To her surprise, they had nothing but good things to say. They told her that Buffett had always been honest and had never done anything hostile in the past or planned to in the future. They thought he was a really good and trustworthy person. This completely changed Katharine's view of Buffett, and she became very interested in him, which eventually led to them meeting face-to-face.

Katharine recounted her meeting with Buffett in Los Angeles in her autobiography, stating, "First of all, Buffett's appearance surprised me because he didn't look like a Wall Street banker or a corporate magnate, but gave me a sense of the ruggedness of the American Midwest. However, his humor and ideas occasionally caught my attention, and this charm never changed. I later told my friends, 'If there is a truly pure person in this world, it must be Buffett.'"

We see that Buffett not only had a good eye for finding treasure companies and investment abilities but also possessed genuine and humorous personality traits in this article.

We've learned that Buffett's ability to win over The Washington Post owner, Katharine, was rooted in his sincerity and genuine sharing. Stay tuned for our next article as we continue to unravel this captivating journey.

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Further Reading