One of my favourite stories from The Mahabharata is that of Barbareek, grandson of the Pandava warrior Bheema. Once it became clear that the war between the Pandavas and Kauravas was inevitable, Barbareek became keen to participate in it. While leaving, he took a vow that he would join the weaker side and the one in problems.
Once all the warriors assembled for the war, Barbareek saw Lord Krishna sad and weeping in a corner. Staying true to his resolve to help the one in a problem, Barbareek asked him the reason for his sadness. Lord Krishna replied that he was sad because there is one person who stands in between the result of the war. And untold hardship will come to mankind if the war doesn’t end and remains in a stalemate. Barbareek told Krishna to stop crying and resolved to kill that person who had put Krishna in that hardship. He just needed to be told the name of the person. Krishna picks up a mirror and shows it to Barbareek. That person was Barbareek himself.
Why?
Because Barbareek was endowed with untold strength and could single handedly conquer the war for either side. In the beginning, the Pandavas side was weaker, so as per his vow, he would join them. Over time however, he would destroy a big part of the Kauravas’ army, then Kauravas would become weaker and Pandavas would become stronger. To always help the weaker side, Barbareek would have to switch sides and fight from the side of the Kauravas. With time, Pandavas would become weaker. He then would have to leave Kauravas and join the Pandavas again. This would become an infinite loop and the war would never end. Lord Krishna foresaw this eventuality.
When shown the mirror, as the person who made Krishna sad, as per his vow Barbareek beheads himself and offers his head to Krishna.
Coming to the billionaires now. Newspaper industry was once the titan of the business world. With wonderful economics and political power, it enjoyed a formidable moat around its business castle. But time can erode the most powerful of the moats. Internet has upended this business upside down with the readers moving online. This was quickly followed by advertising and the marketing dollars moving online. Newspapers no longer carry the political, financial and the business muscle. Once a champion of newspapers, Buffett has sold all of his newspaper investments.
However, some billionaires around the world are trying to resuscitate newspapers – some hard-nosed capitalists are seeing opportunities and trying to infuse life into them while making money for themselves at the same time. Another species of billionaires who grew reading up these newspapers are trying to revive them by restructuring them, putting them in a non-profit foundation and endowing the foundation with substantial grants. Like Barbareek, these billionaires are on the side of the weak. Only time will tell, if they achieve their objectives.
These very interesting articles in The Wall Street Journal talks about these developments around the newspaper industry.
3 comments:
Hello Ankur - Very interesting – it has a nice parallel to how to outperform in the markets i.e. by rotating from one undervalued sector to another or from one undervalued company to another. For instance, one can hit a 100 bagger by picking a company that rises 100x or by picking two 10-bagger companies one after the other (10x * 10x = 100x). And empirical evidence says that the probability of the latter exceeds the former.
In fact, Barbareek only had two sides – Kauravas and Pandavas – to rotate to and from. But in the market, there are 10 sectors and innumerable companies. Probably, billionaires supporting newspapers have reached this far by uplifting / rotating across a few sectors/businesses over their lifetime, and newspapers are their latest undervalued venture. Let’s see if this becomes a value trap or a bargain from which these billionaire investors emerge stronger to support more such weak businesses in the future.
Thanks - Ritesh
Another noteworthy point - renowned US fund manager Bruze Berkowitz made money in banks in the 90s and energy in the 2000s (Morningstar named him 'Domestic Star Fund Manager of the decade' in 2010) and heavily backed Sears Holdings (US brick/mortar retailer) in the 2010s and went down with it. Bruce's value-seeking and contrarian attitude took him to the zenith as well as to nadir.
Sears had two enemies: Amazon + Debt. While newspapers are mostly debt-free.
So it is a fight between value vs growth; new vs old generation. Lets see ...
txs - ritesh
Thanks Ritesh for sharing your thoughts.
Yes, theoretically it sounds more probabilistic to find two 10 baggers than one 100 bagger and hence the possibility of higher returns if one rotates within industries and companies. But as Yogi Berra said " In theory, theory and practice are the same but in practice they are different". So, in practice to rotate between industries and companies might actually leave one poorer since one sold the 10 bagger (that later became a 40 bagger) in search of another 10 bagger which at best gave paltry returns and at worst lost money and eroded capital.
I am gravitating (have gravitated) to the view that if the business is terrific, it's better to leave it untouched even though the valuations might seem stretched rather than selling it and kissing the toads in the hope that one of them turns out to be a prince. But this is applicable ONLY IF the business one holds is terrific. Cigarbutts which have a puff or two left in them are to be necessarily sold after inhaling the last puff. But I no longer look at cigar butts because there is a huge opportunity cost of time.
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