Buffett's Lee Enterprises (LEE) Stake Not All It's Cracked Up to Be
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Big news in Buffett-land Wednesday was that the Oracle's Berkshire Hathaway (NYSE: BRK.a) disclosed a new 1,655,125 share stake in Lee Enterprises Inc. (NYSE: LEE). He held the stake at the end of the first quarter but only disclosed it Tuesday evening after a confidential treatment request with the SEC was denied. However, looking deeper at the investment shows that it may not be all it's cracked up to be.
In January 2012, as part of a prepackaged Chapter 11 process, Lee Enterprises implemented a refinancing to extend the maturities of its borrowings to December 2015 and April 2017. As part of the deal, second lien creditors were given approximately 6,744,000 shares of Lee Common Stock.
Guess who reportedly owned Lee second lien debt? That's right Buffett.
So in essence, a good chuck of Berkshire Hathaway's stock could have come in the way of this refinancing deal. Meaning they bought little, if any, Lee stock in the open market.
Still the question remains: Why did Buffett request confidential treatment on the position? - and - Why was it denied?
Shares of Lee are up 20 percent into the close.
In January 2012, as part of a prepackaged Chapter 11 process, Lee Enterprises implemented a refinancing to extend the maturities of its borrowings to December 2015 and April 2017. As part of the deal, second lien creditors were given approximately 6,744,000 shares of Lee Common Stock.
Guess who reportedly owned Lee second lien debt? That's right Buffett.
So in essence, a good chuck of Berkshire Hathaway's stock could have come in the way of this refinancing deal. Meaning they bought little, if any, Lee stock in the open market.
Still the question remains: Why did Buffett request confidential treatment on the position? - and - Why was it denied?
Shares of Lee are up 20 percent into the close.
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