New York Times: It's Cheap for Good Reason

In retrospect, the paper was clearly trading at a distressed level and serves as another example of Mr. Buffett "waiting for a fat pitch" when it comes to investing. Even though Berkshire Hathaway (BRKA Quote) still owns almost 20% of the Washington Post today, Buffett has said as recently as 2003 that he sees nothing to turn around the erosion in both the advertising and circulation side of the business over the long term.

If we had a better idea of how long the decline in fundamentals will last, we might be able to make a long-term bet on the stock, but, as is, it's difficult to find a catalyst for the stock on a long-term basis.

The company is set to report quarterly earnings on Jan. 31, and with the stock down more than 25% since reporting third-quarter results on Oct. 23, there may be potential for a short-term bounce, especially considering that 13% of the float is now being shorted by traders. Beyond a potential short-term trade, however, shares of the New York Times just aren't right for investors looking for a small-cap play in the media sector.

Larsen Kusick is a research analyst for Stocks Under $10. He and his team assemble a winning small-cap portfolio, including alerts when they buy and sell, and a detailed weekly roundup that recaps their holdings, which also include Taser, Xoma and Sirius Satellite.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider New York Times to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.