Warren Buffett is considering exiting his four decade investment in Graham Holdings Co (NYSE:GHC) (formerly the Washington Post Co.) according to a regulatory filing. According to the SEC Filing, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) would swap its entire stake in Graham for some combination of assets or companies that Graham owns and Berkshire Hathaway common stock structured as a tax-free split-off.
The filing specifies that there is no specific deal on the table right now, and that the Graham Holdings Co (NYSE:GHC)’s board of directors hasn’t been consulted about a potential deal even though it would require their approval, so this is still very much in the early stages.
Berkshire Hathaway owns 28% of Graham Holdings
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) owns about 28% of Graham (1.73 million shares worth $1.1 billion), report Noah Buhayar and Zachary Tracer for Bloomberg, but it’s not clear which unit Buffett is most interested in. Graham owns Kaplan the educational company, multiple television stations, and a number of prominent websites including Slate, The Root, and ForeignPolicy.com. Graham Holdings changed its name after Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos bought the eponymous newspaper last year and required Graham to change its name as one of the terms to avoid confusion in the future.
Graham Holdings stock price up 64% this year
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) owns literally dozens of newspapers, many bought in the last few years, but it has been invested in Graham Holdings since 1974 and Buffett is reportedly friends with the Graham family that ran the paper for many years. With the sale of the newspaper, Graham became a radically different company and it may simply be that Buffett is no longer as impressed with its overall direction.
Graham Holdings Co (NYSE:GHC)’s stock price has risen 64% over the last year, beating the bull market, and while the sale of the newspaper may have been a loss of prestige it also meant that the company no longer had to manage a large operation that mostly destroyed shareholder value. This rapid growth also suggests that Buffett, the consummate value investor, may believe that Graham Holdings Co (NYSE:GHC) is now being overvalued. If he can swap his valuable shares for the fastest growing segment of the company, his forty year investment will continue to pay off well into the future.