DJCO

DJCO is best understood as three businesses bolted together, and the headline P/E of 6.7x is misleading. The MD&A discloses that of $150.1M of pretax income, $134.3M came from net realized and unrealized gains on marketable securities — i.e., the equity portfolio (Munger-era holdings) drove the bulk of the FY2025 result. Consolidated operating income was just $9.53M on $87.7M of revenue, so the 10.9% reported operating margin and the 127.9% 'net margin' are accounting artifacts of the investment book, not the operating business. Stripping mark-to-market, the durable earnings stream is operating income + dividends and interest ($7.46M) − interest expense ($1.38M), or roughly $15–16M pretax — against a $747M market cap, that is not cheap on operations alone.

That said, the operating story is genuinely improving. Journal Technologies, ~80% of revenue, grew 31.7% (revenue $69.9M vs. $53.1M) and operating income jumped from $2.5M to $12.7M — consulting fees +$7.6M, other public service fees +$5.7M, license/maintenance +$3.5M. This is a real software-services business levered to government court-tech digitization in ~37 states plus international. The Traditional Business, by contrast, swung to a $0.2M operating loss as legal advertising erodes (AB542 already cost ~$14k in FY24, and AB721 moves school-budget notices off newspapers entirely effective 2027 — management flags these as 'materially adverse' if the trend continues).