Buffett's Puzzling Acquisition

NEW YORK (TheStreet) -- Heading into the closing weeks of 2011, Warren Buffett gave off the impression that his acquisition elephant gun was locked and loaded. However, after hearing about his most recent deal, it appears that the world famous investor may have traded in his heavy artillery for a pea shooter.

During the middle of the week, investors learned that the Oracle of Omaha had expanded his reach into the media industry with the purchase of his hometown newspaper, the Omaha World-Herald.

In the initial period following the announcement, market commentators, investors, and Buffett fans have been left scratching their heads. This newspaper acquisition is a confounding move, capping off what had already been a peculiar month for the world famous investor.

Warren Buffett

In some ways, Buffett's decision to purchase the Nebraska-based newspaper firm makes sense. The billionaire has had plenty of exposure to the newspaper industry in the past. For instance, Berkshire Hathaway(BRK.A) is both the largest Washington Post(WPO) shareholder and the owner of The Buffalo News. A small slice of the Berkshire portfolio is also set aside for Gannett(GCI).

In addition, as evidenced by Berkshire Hathaway's most recent 13f filing, the investor's empire's exposure to the media sector has been increased in the past few months with the purchase of a small stake in DIRECTV(DTV).

On the other hand, however, Buffett's recent acquisition seems to fly in the face of his "sure thing" investing strategy.

Despite his extensive history with printed news, Warren Buffett's outlook for this "old media" industry has been anything but optimistic. A report from Bloomberg notes that he has expressed his confidence in the long term strength of Omaha World-News. However, as many have pointed out, in 2009 the investor told Berkshire Hathaway investors that, due to factors such as the growing readership migration towards the Internet, newspapers face the potential for "unending losses."

The $150 million price tag placed on Buffett's hometown newspaper is another perplexing element. While appropriate given the size of Omaha World-Herald, the small size of this acquisition is likely a disappointment for those who have been following the investor's words and actions over the past few weeks. At the start of the month, Buffett stole headlines following the report that he had put nearly $24 billion to work in the third quarter of 2011. Included within this shopping spree was a landmark and uncharacteristic $10 billion investment in International Business Machines(IBM).