Berkshire’s 1973 investment in the Washington Post Company became legendary due to Buffett’s role on the company’s board of directors from 1974 to 2011 and his close relationship with successive chief executives, Katherine (“Kay”) Graham and her son, Donald E. (“Don”) Graham. The Graham family sold the flagship newspaper in 2013, renaming the company Graham Holdings, which today owns a mix of other media-related assets. Shortly thereafter, in 2014, Berkshire traded its stock in Graham Holdings for one of those business units—a Miami television station.7
The Washington Post traces its roots back to 1877 and publisher Stilson Hutchins, who wanted to focus attention on national affairs from the viewpoint of the Democratic Party.8 In 1905, the paper was acquired by John R. McLean, a publisher in the mold of newspaper magnate William Randolph Hearst, who expanded coverage to include features and sports. On his death in 1916, McLean was succeed by his son Edward, who in the 1920s became ensnared in the disgrace du jour of the nation’s capital, the Teapot Dome scandal, a fateful distraction from the business, precipitating its financial failure.
Table 13.1
Selected Leading Berkshire Investees
Investee Market Value ($ million) Percentage Owned by Berkshire (%)
American Express 13,681,349 14.27
Bank of America * *
Bank of New York Mellon 828,828 2.15
Chicago Bridge & Iron 733,115 8.90
Coca-Cola 16,184,000 9.06
ConocoPhillips 957,466 1.10
Costco 528,930 0.99
Deere 339,468 1.04
DIRECTV 2,426,036 6.95
DaVita HealthCare 2,047,671 16.52
ExxonMobil 3,834,548 0.92
General Electric 304,122 0.11
General Motors 1,606,800 2.88
Goldman Sachs 2,184,196 2.88
IBM 12,522,183 6.54
Johnson & Johnson 30,891 0.01
Kraft Foods 10,317 0.03
Lee Enterprises 302 0.17
Liberty Media 837,897 4.97
Mastercard 307,180 0.34
Moody’s 1,842,247 11.59
Mondelez 20,282 0.03
Media General 92,227 5.25
M&T Bank 615,167 4.13
Munich Re 4,415,000 11.20
National-Oilwell Varco 724,519 2.07
Precision Castparts 502,895 1.36
Procter & Gamble 4,462,070 1.94
Sanofi 1,747,000 1.70
Starz 160,461 4.97
Suncor Energy 434,980 0.87
Tesco 1,666,000 3.70
Torchmark 325,226 4.68
U.S. Bancorp 3,137,800 4.33
USG 1,208,246 25.10
Visa 314,000 0.24
Viacom 625,311 1.69
Verisk Analytics 105,266 0.93
Verisign 626,998 8.00
WABCO 368,051 6.51
Walmart 4,470,000 1.52
Wells Fargo 21,370,054 8.81
Note: Shaded entries indicate portfolio concentration, highlighting stocks that aggregate nearly 70% of the total.
The share data in table 13.1 are sourced primarily from CNBC, which collated them from Berkshire Hathaway’s 13-F filings with the Securities and Exchange Commission (February 14, 2014 and February 26, 2014), most at year-end 2013. Also included are year-end 2013 market prices. Supplemental information, such as concerning non-U.S. stocks and portion of investments represented in Berkshire’s portfolio, comes from Berkshire Hathaway annual reports.
*Through 2021, Berkshire has the option to acquire for $5 billion 700 million shares of Bank of America stock, whose current market value is $11 billion. Exercise of this option, which Berkshire likely will do on the eve of its expiration, would make Bank of America among Berkshire’s largest holdings.
Out of bankruptcy in 1933, the Post’s assets were acquired by Eugene Meyer, Kay Graham’s father. A Republican banker from New York, Meyer believed—as Buffett would later—that a newspaper could offer both civic virtue and private profits. The paper succeeded under Meyer, until his appointment by President Harry S. Truman to be the first president of the World Bank. He then transferred control of the paper to Kay and her husband, Philip L. Graham. As her father had envisioned, under Phillip’s leadership through 1963 and Kay’s thereafter, the Washington Post Company prospered as a business and also provided a public service.
Kay Graham published the Pentagon Papers in 1971 against the advice of lawyers who explained that publishing the top secret government history of the Vietnam conflict could expose the company to criminal liability. To her, the paper’s reputation for integrity was worth more; the Supreme Court soon upheld the Post’s right to publish, vindicating Kay’s stance.9 Graham also presided over publishing the paper’s series by the young dynamic duo of Bob Woodward and Carl Bernstein on the Watergate affair that toppled President Richard M. Nixon. Graham believed in the autonomy of these journalists and the paper’s top editor, Ben Bradlee. Such events demonstrated Graham’s and the Post’s earnestness and made both heroic figures in contemporary American culture.
On the financial end, Meyer funded the company’s profit-sharing plan and compensated employees with stock, making it necessary for the private company to maintain a market for its own shares. To eliminate this burden, in 1971, Graham arranged for the company to make a public offering of its Class B shares—she retained a majority of the Class A shares and her children the rest of the Class A, securing the Graham family control of the company.10 In 1973, Berkshire acquired more than a 10-percent stake. Buffett assured Graham, however, of his respect for the family tradition of ownership and control. Graham appreciated this and, in 1974, nominated Buffett to join the corporate board. Buffett was the board’s lead outside director, according to her son Don, who joined the board at about the same time.11