ink-stained wretches

Carlos Slim Is a Wizard at Rescuing Beleaguered Companies During a Downturn

Throughout his endless (though interesting) profile of Mexican billionaire Carlos Slim, New Yorker scribe Lawrence Wright provides example after example of the canny businessman’s habit of taking advantage of economic downturns to scoop up undervalued and persecuted companies, only later to cash in on massive rewards. During the worldwide economic slump in the early eighties, Slim made his first big buying spree — scooping up cotton-gin manufacturer Anderson Clayton, a giant Firestone subsidiary, and the insurance company Seguros de Mexico. All turned out to be super-lucrative, with the last — bought for $55 million in 1984 — now worth $11 billion. “Those were the best times ever,” Slim said. “Nobody wanted to buy anything and everyone wanted to sell.” In 1990, Slim bought up Telmex, Mexico’s archaic, inefficient nationalized phone company. It was not “much of a prize” at the time, but with a lot of investment Slim was able to take advantage of the lucrative government concessions that came with it to turn it into his most lucrative business — now including television, mobile phones, and Internet.

Despite all of the evidence he himself provides regarding Slim’s legendary investment savvy and straightforward, almost Buffett-esque style of simple valuation, writer Wright can’t quite seem to wrap his mind around why the billionaire — now the third-richest man in the world, but once the first — wants his hands on the New York Times Company. Now the largest creditor of the company (he’s lent $250 million) and a main stockholder, he not only stands to be first in line in the division of assets during a potential bankruptcy, but he also has the power to stop takeovers or major changes. Even Times Company board advisers couldn’t wrap their heads around his interest. “”We were saying, ‘this guy is crazy!’” one said.

Finally, when Wright gets around to asking Slim about the move, Slim’s answer is pretty straightforward: “We think it’s the best newspaper,” he said. “We believe in media content. We think paper will disappear, but not the content. The content will become more important.” Wright takes this to mean that he’s banking on the fact that the Times will become nearly a monopoly one day — that is, one of the only reliable and viable sources of news. Since Slim had such success with monopolies in the past, it’s no surprise he’d try to sniff out another one. But this argument sort of jumps the logical step that no one, including Wright, seems willing to recognize — that the Times might actually just be a good investment that’s currently undervalued because of the downturn. And that with Slim’s help (and his sometimes-ruthless competition and willingness to make draconian cuts), it might actually start (gasp!) making people some money.

Slim Time [NYer]

Carlos Slim Is a Wizard at Rescuing Beleaguered Companies During a Downturn