A 32 year long Love Affair.

This love affair I am about to tell you about has been going on 32 years.  My wife even knows about it since I introduced it to her just a few months after we started dating.  Indeed she enjoys partaking in it now as much as I do.   However before I tell you about my love affair, let me tell you the "juicy" details of just how it got started those many years ago. 

I remember the exact day well, it was a Wednesday around 11:30 AM or so.  The date was Jan. 4 1983 and I had just joined the Lumberton NC Robesonian newspaper as their new advertising director.  My boss who wanted me to get to know the entire operation I would be working with had told me I would be helping out the sister newspaper in the adjoining town since he oversaw that operation as well. So this Wednesday morning we got into his car and headed towards the town with the sister newspaper.  

Down NC Highway 41 we headed east and drove into the little town of Elizabethtown and headed towards the newspaper office.  I had some familiarity with Elizabethtown since US Highway 701 intersected NC 41 in town and US 701 was the way to Myrtle Beach.  However this day was to go see the employees at the Bladen Journal our sister newspaper.  We arrived at the newspaper, spent some time with the staff and toured their office and facilities.  That is when the moment arrived. 

The moment was about 11:15 AM and my boss said we would head back to Lumberton, but would stop for lunch first.  Now lots of places in E-town as locals like to call it to have lunch but my boss for some reason picked what seemed to be nothing but an old pool hall in a storefront downtown. We walked in around 11:20 AM or so and I saw a line about 50 people long waiting in line to dine on the pool hall fare.  Strange I thought of all places to eat, here, my boss picks some hole in the wall with a long line to wait for and few tables.  But wait we did since he was the new boss and besides he was buying. 

The line moved quickly and within 3 minutes or so we were approaching the place to pay and get your food.  I told them to give me a couple of burgers and my boss suggested to get it all the way which I obliged.  Next up some lady with the fastest hands you would ever see whipped together two burgers with onions, chili, mustard, and slaw.  We headed to our table to eat. 

My boss for some reason waited until I took the first bite of my burger and asked me how I liked the burger.   This is when my love affair began.  No way to describe it but love at first bite of my all the way burger from Melvins of Downtown Elizabethtown.  My boss having dined here some 6 months earlier the first time wanted to see if my reaction to the burger was the same as his was those some months ago and as we later discussed and indeed it most certainly was the same. 

Now you can find burgers you like better I am sure, but for me the ultimate in burger love is an all the way Melvins burger and as my wife will attest I LOVE burgers.  Melvins burgers comes with regular mustard, onions, and some secret recipe of chili and very creamy slaw.  Add in a very crispy outside texture which makes for better flavor and nice crunch in the mouth.  The chili and slaw are lathered heavily over the burger and makes the meat juicy and not dry.  You will need lots of napkins because there will be lots on your hands and lots more on the white paper wrapping the burger comes in.  I take in a minimum of three of these good sized burgers and waste NO stomach space on such add ons you can buy like chips and such which you can buy anywhere so why bother.  Add the cola drink and I am set for several minutes of heavenly delight. 

Pat Melvin and his wife who owned the place and made up the burgers for many years sold the place some years ago and frankly the burgers may be a tiny bit off quality wise than they were before, but for us the taste, the dining in experience with others, and the pleasure of remembering the many times we have dined there over 32 plus years remains a draw. 

So several times a year I make the about 90 minute drive from my home to Elizabethtown for one purpose, destination dining.  Yes a 90 minute drive to buy BURGERS. My wife who got introduced to Melvins right soon after we started dating is always ready for the ride too.  Funny thing is almost every time I go someone at the table nearby has done a similar drive of if it is a local they say they understand the effort.  My wife has instructions to bring me a bag of these babies on my deathbed.

Old Media...Undervalued Cash Cows

We will admit we have been incorrect so far in this pick, but we still believe this is a great buying opportunity.  The stock here is New Media Investments, symbol NEWM, which owns a nice portfolio of small to medium sized newspapers many of which are dailies. Yes we know newspapers are so yesteryear, but stay with us here, we are talking about smaller newspapers in markets where the news is not covered by big television stations or national media. In my own state look at some of the properties they own,  Jacksonville, New Bern, Wilmington, Asheboro, Burlington, Lexington, and Shelby just to name a few. These towns are not covered by a large television station or a large newspaper, the people in these towns consume news too and the only way to get LOCAL news is by their local newspaper.  No one covers the town councils, the school boards, local business, local news other than the local newspaper there.  Add in there is little no competition in these towns for the local media.  So with a demand for news and the local newspaper being the only supplier they got a nice market position.  Many in these towns have lived there all their lives and are loyal to local media as well. 

So the owner of these newspapers has a market position and with the economics of newspapers finally getting down to basics now since the end of the overvaluation era newspapers one can make some nice profits.  Many of these properties are showing cash flows of 20% plus, which in any business is a very nice profit.  Add in that NEWM is buying these properties cheap and they need little or no capital investment to keep the cash flow going.  We have been in the media business now for right at 4 decades and we believe we know the deal here, but if you do not believe us maybe you will believe some other investors.  Lets start with Warren Buffet who has a very nice portfolio of these newspapers,  how about Carl Icahn who recently loaded up a another of these stand alone newspaper companies, Gannett.   Finally Leon Cooperman, one of the smartest and wealthiest investors today, just bought another $2 million dollars worth of NEWM, and he already owned over 10% of the company. 

We might be wrong here and with the stock down from the mid $20's to now just over $17 those of us who own shares have felt some pain. This stock and Gannet, symbol GCI, look like good buys here. We believe NEWM is an outright steal below $18 and we own 4800 shares so we buy our own home cooking too.  There is capital gain potential and you are paid well to wait.  How about almost 8% well covered dividend too.  So take a look at these two old media newspaper companies as part of your portfolio.  NEWM will be reporting second quarter earnings July 30 so either buy before for a bump or after for some more assurance.