The print publishing industry isn’t booming, but the stock of legal newspaper chain Daily Journal Corp. is on the rise. That’s thanks to investment guidance from its chairman, billionaire investor Charlie Munger.
The majority of the Daily Journal’s value is its investment portfolio, which the company began building near the trough of the market in February 2009 when it moved some of its cash and treasury bills into stocks. That allowed some investors to use Daily Journal stock as a vehicle to invest with Munger.
It’s an investment that has paid off. The value of those investments has increased, bringing Daily Journal stock along for the ride. Its shares hit a 52-week high last week, rising 5 percent to close at $107.88 for the week ended March 27. Shares are up 14 percent for the year. (See page 31.)
The company’s investments, which were purchased in recent years for about $50 million, had unrealized gains of $7.2 million for the quarter ended Dec. 31 and were worth about $114 million at that time, the company reported in February.
By comparison, Daily Journal’s core publishing and software businesses generated profit of $834,000 for the quarter on revenue of $7.7 million.
“The gains in the investment portfolio have driven Daily Journal over the last few years,” said Alex Rubalcava, founder of investment firm Rubalcava Capital Management in Playa Vista.
The recent rise is not an anomaly. Company shares advanced 41 percent last year after gains in the investment portfolio were disclosed.
Its holdings now include shares in three Fortune 200 companies, two foreign companies and bonds of a sixth company, according to Daily Journal’s most recent annual report, filed in December.
Munger, who owns about 4 percent of Daily Journal shares, has guided the company’s board in making investment decisions alongside Vice Chairman J.P. Guerin.
While the report did not name the companies in which it had invested, Munger’s known support for certain stocks has fueled speculation that the portfolio includes a position in San Francisco financial services company Wells Fargo & Co., which has seen its share price roughly quadruple since March 2009.
Other holdings are believed to include Chinese electric-car manufacturer BYD, a favorite of Buffett’s. In fact, Chinese hedge fund manager Li Lu, known to have introduced Buffett and Munger to the possibility of investing in BYD, attended Daily Journal’s annual shareholder meeting held at the company’s downtown L.A. headquarters in February.
At that meeting, Munger hinted that the speculation about the investments was accurate, saying that the portfolio has already been figured out. A Daily Journal spokeswoman did not return a call for comment.
The portfolio has meanwhile provided other benefits for Daily Journal, which is looking to diversify from print media.
The company said in its annual report that the holdings helped the company obtain favorable financing on a $14 million loan it took out to purchase case management software company New Dawn Technologies in December.