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Is This the Next Warren Buffett?

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It almost feels like a game of one-upmanship.

Earlier this week, Mexican billionaire Carlos Slim Helu made a deal to invest $250 million in ailing media conglomerate New York Times Co. (NYSE: NYT  ) .

The terms are rich. Slim yields 14.053% in annual bond payments and gets warrants to purchase 15.9 million class A shares of New York Times for $6.3572 each, a 7.6% premium to Monday's close (before the deal was finalized).

If that deal sounds better than what Warren Buffett extracted from Goldman Sachs (NYSE: GS  ) and General Electric (NYSE: GE  ) , it is. Maybe. Slim gets a higher guaranteed return -- 14% versus 10% -- and risks less capital than the billions Buffett spent for preferred shares of Goldman and GE.

On the other hand, what would you rather own? New York Times? Or Goldman and GE? Our 125,000-strong Motley Fool CAPS calls this one a no-brainer:

Metric

New York Times

General Electric

Goldman Sachs

CAPS stars (5 max)

*

****

***

Total ratings

310

12,251

5,155

Percent Bulls

37.4%

93.3%

90.1%

Percent Bears

62.6%

6.7%

9.9%

Bullish pitches

23 of 68

2,088 of 2,261

755 of 838

Data current as of Jan. 22, 2009.

"[New York Times] has an illiquid balance sheet. It is also loss making and distributes an unsustainable dividend. It operates in one of the most loss making industry: newspapers publishing," wrote CAPS All-Star cashsage earlier this month.

Good point. The news from New York Times and peers like Gannett (NYSE: GCI  ) and McClatchy (NYSE: MNI  ) is rarely good. Gannett, for example, says that it is very close to shuttering the Tucson Citizen, an afternoon paper.

So is why is Slim buying now? Returns. "We think it's a great brand," Helu deputy Arturo Elias told ABC News. "We think it's a good financial opportunity. And that's what we thought to make these investments."

No talk of a turnaround; it's just a good deal for Slim. One that we common Fools can't get. Don't get sucked in.

Get your clicks with related Foolishness:

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication.

Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy needs to wash the ink off. Be right back.


Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 24, 2009, at 8:37 PM, EddieE2 wrote:

    Hard to argue about the great deal Buffett got for GE in Oct 2008, but I think he has already lost about HALF his money (if the common has fallen from $24 to $12, the preferred must be close to the same performance). Even if his special 10% dividend is effectively 20% now, it will take 5 years to break even (assuming no further change to the stock price, which is unrealistic, of course).

  • Report this Comment On January 25, 2009, at 12:45 AM, Wharton93 wrote:

    Carlos Slim is a thief. It's criminal what one of the world's richest men was allowed to do to the creditors of CompUSA when he walked away from it. I hope the NYT takes more of his millions down with it.

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Tim Beyers
TMFMileHigh

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.

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Related Tickers

8/27/2015 4:04 PM
GCI $12.05 Down -0.35 -2.82%
Gannett CAPS Rating: No stars
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