A small cap company with huge potential
The Daily Journal Corporation (NASDAQ:DJCO) is a $217.7 million dollar company. It publishes newspapers in California and Arizona, and the California Lawyer magazine. The company’s namesake papers, The Los Angeles Daily Journal and the San Francisco Daily Journal, are over a century old and are more focused on law than most papers. Munger’s extensive background in law and love of classical things probably drew him to this company.
I was able to find out that Munger has been the chairman of the company since at least 1995. Since that year an investment in the company’s stock has grown at a 12.35% CAGR. Over 18 years that would turn one dollar into more than 8.
The company has no debt. In addition to newspapers and magazines, The Daily Journal Corporation (NASDAQ:DJCO) supplies case software to people in the field of criminal justice to make them more efficient. A cool idea, but the company is still very pricey relative to its net income. The company’s regular business isn’t what makes it look like a great investment.
It also has a $120.3 portfolio of investments, 93.4% of which are stocks. The company’s portfolio of cash, cash equivalents, bonds and marketable securities has grown at a 19% CAGR for the past three years. The company bought $20.96 million worth of marketable securities in 2012. A legendary investor is using this small company as a vehicle for investments in common stocks, and vehicles like that are not a common occurrence.
Foolish final thoughts
The Washington Post Company, to me, does not appear to be a good investment. It is struggling in more than one area and has a P/.E ratio of over 90. A decent amount of its revenue comes from the federal government to issue student loans. That is not the type of business I want to own.
Buffett bought a stake in Media General. Perhaps he knows something that I don’t, but the company looks like a bad buy. Buffett issued the company debt with ludicrous interest rates, so he has made his money. But buying in now is betting on a successful merger between two operators of television stations, with a pile of debt between them.
The Daily Journal Corporation (NASDAQ:DJCO) looks like a blessing from the investing gods. Charlie Munger, patron saint of compounding wealth, is at the helm of this small cap company. He is growing the company’s investment portfolio at an incredible pace. It would be foolish to assume that this company will be the next Berkshire Hathaway, but one can dream.
The article Will Buffett And Munger’s Media Investments Make You Rich? originally appeared on Fool.com and is written by Ryan Palmer.
Fool blogger Ryan Palmer has no position in any of the stocks mentioned in this article. The Motley Fool has no position in any of the stocks mentioned.
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