“I have met the threat … and was conquered unfortunately.”

— Katharine Graham, CEO of The Washington Post Company, on Warren Buffett

My grandfather, who inspired me to begin thinking about and learning all I can about investing, often sends me clips and blips of juicy stuff he finds interesting: blogs, articles, and new books – all with a finance/investing tilt. Most recently, he told me to check out the documentary on Amazon called Becoming Kathryn Graham. His fascination was with Graham, the CEO of The Washington Post Company (1963 - 1991), but also with the intensive admiration and deep friendship that Warren Buffett had with her.

Warren Buffett once commented that he found a sheet of paper on Graham’s desk that read, “Assets on the left, liabilities on the right.” At the start of her career, Graham feared business, but by the end, she was deemed one of the greatest executives of American business (and one of the least likely to have been thought to be!).

Graham was born into a wealthy New York City family. Her father bought The Washington Post at a bankruptcy auction in 1933. He handed the ownership of The Post to Graham’s husband, Philipp, in 1946. Philipp owned two-thirds of the shares, and Graham held the rest. Her father entrusted Philipp to run the company despite Graham having her own journalism background.

Graham took over The Washington Post Company in 1963, a month after her husband committed suicide. At that point in her life, she was a 46-year-old mother and housewife and had not held employment for 20 years. With no business experience, she understood that her predicament was indicative of the “times”. She had recognized that her father thought of her late husband over her when he passed the paper to him. “It never crossed my mind that he might have viewed me as someone to take on an important job at the paper.”

Graham became the only female CEO of a Fortune 500 company. She had tremendous insecurity and fear of being unprepared. The insecurity haunted her throughout her career, even when she generated astounding value for the company’s shareholders. Not only had she stood firm against the government with the Pentagon Papers, earned Nixon’s disgust as the publisher of the paper that openly pursued the Watergate scandal when others wouldn’t, but also during her time at the helm, the Post Company’s compound annual return to shareholders was 22.3%. This outperformed the S&P by 18 times and her peers by 6x. Ultimately, she generated 1.9 times the value for every dollar retained within the company.

The Amazon documentary Becoming Graham features Warren Buffett throughout. Buffett first invested in The Washington Post Company (a “random investor”) in 1973. At that time, he wasn’t a big guy yet and was little known on Wall Street. He started buying up The Post Company’s stock, and Graham and company suspected a hostile takeover. Once Buffett had bought more than 5% of the company shares, SEC regulations required him to notify Graham of the acquisition, which he did with a warm letter. Graham was warned by board members that this did not spell good news, and met with Buffett, who informed her that he thought the market and management undervalued the Post Company’s stock. Buffett was confident that the value would rise. Graham liked him a lot.

“I have met the threat … and was conquered unfortunately. You’ve got to keep warning me about how they always charm you at first. He has … But if he isn’t OK, I’ll eat and digest my hat – or your hat since I don’t wear them anymore.”

Graham recognized what an asset Buffett could be and chose him as her mentor, confidant, and business advisor, inviting him onto the company’s board. It was the beginning of a long relationship between the pair, which turned into mutual admiration and friendship. In the early days of their relationship, Buffett noticed that Graham was insecure about finance jargon. Buffett took her aside and walked her through annual reports of various interesting companies.

“He told me that, whereas Otis Chandler collected antique cars, he collected ‘antique financial statements’ …because just as with geography or humans, it is interesting to take a snapshot of a business at widely different points in time – and reflect on what factors produced change as well as what differentiates the specific pattern of development from others. ”

— Graham on Warren Buffett's mentoring

Buffett guided Graham on important capital allocation decisions, but did so with utmost respect. Among Graham’s financial crowning achievements is her ability to recognize outstanding talent and her choice of COO (Dick Simmons). With Simmons, in the 1980s, The Washington Post Company began achieving goals of sustaining earnings growth, developing new business, and building for the future.

When all of her competitors installed new, expensive printing and prepress facilities, Graham was the only major newspaper CEO who waited until costs had dropped and discovered that the benefits of the technology were proven before investing. During the recession of the 1990s, Graham took advantage of reduced prices and purchased a series of cable systems, underperforming TV stations, and several education businesses.

Graham took advantage of buybacks once Buffett explained the math behind stock repurchases. She eventually bought back nearly 45% of the company after overcoming resistance from board members, creating enormous value for shareholders. Throughout her career, Graham maintained low levels of debt. She also consistently distributed dividends, which were beneficial for shareholders.

Graham’s story is not so much about the triumph of the underdog or that of a female figure of power during a time when men dominated the landscape. Instead, what strikes me, and my grandfather, is the powerful mentorship and friendship between Graham and Buffett. Graham learned from Buffett, and Buffett took the time to teach her. In a world where so much is done behind the scenes, online and through AI, I have a vision of Buffett and Graham sitting side by side at her office desk (not over Zoom) engaging in a whole bunch of teaching moments – moments that not only result in furtherance of skills and knowledge but the kind of hands-on learning that I hope to experience in the field of finance.

Katharine Graham

Voltaire

Investing Giants and Me