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April 30, 2007 / Toby Dayton

Portfolio Is Worth The Read & I’d Hate To Be Bruce Sherman

portfolio.gifAs somewhat of a media junkie with subscriptions to more magazines and newspapers than I can get through some months, I try to not add to the pile with superfluous titles. But my pile of monthly reading material grew a bit larger recently after reading the first issue of Portfolio, Conde Nast’s new business magazine. I read almost every single article in the inaugural issue, which is saying something given its 328 pages and somewhat lengthy stories. Articles included a piece by Tom Wolfe on hedge fund managers, the growing spectacle of private equity funds, the challenge economists have in calculating the impact of global warming, a trading exchange for professional athletes, and a interesting story on Marianne Boesky’s new contemporary art gallery. The stories are thorough, well-written, and engaging, the topics covered are interesting and fairly unique in the mainstream business press, and the photography is borderline spectacular (at least for a business magazine). I would highly recommend picking up a copy, especially if you enjoy Vanity Fair and are bored with Fortune and Forbes (and who has never been anything but bored with Steve Forbes?).

In the first issue, one of the most interesting stories was an article on Bruce Sherman, the CEO of Private Capital Management (PCM) and the man responsible for forcing the $6.5 billion sale of Knight Ridder to McClatchy. Sherman has now set his sights on the New York Times and is waging a proxy battle along with Hassan Elmasry of Morgan Stanley against Arthur Sulzberger Jr. Without question, Sherman is the most influential owner of newspaper holdings in the country, and despite the fact that he has trimmed his positions slightly, he still holds $1.79 billion worth of investments in newspaper stocks. PCM owns 9% of the New York Times, 3% of Gannett, and 12% of McClatchy. For obstinately sticking to this contrarian investment thesis, Sherman has taken a beating from both the capital markets and his clients who are getting impatient with the growing losses. In a letter to his investors, Sherman wrote, “Our investment in newspaper stocks continues to cause concern for some clients. Given the disappointing returns achieved thus far, we understand their consternation. In some regards, it would be easier to abandon the investment theme than to continue to argue the point. As investment managers and fiduciaries, we are not paid to make easy decisions, but rather charged to do what we believe is prudent and correct.” In response to a friend who asked if Sherman is still ‘in the game,’ the article quotes Sherman replying, “This is what I do. I don’t do other things. This is me.” Well then, Bruce, it sucks to be you.

[tags]Portfolio, Portfolio Magazine, Business Magazines, Conde Nast, Private Capital Management, Bruce Sherman, Knight Ridder, McClatchy, Gannett, The New York Times, Newspapers, Death of Newspapers, Media, Fortune, Forbes, Steve Forbes, Publishing, Daily Papers, Contrarian Investments, How To Lose Your Clients’ Money, Cut Your Losses[/tags]