Seattle/New York: People obsess over Warren Buffett’s moves in the stock market, analyzing every word he says in the media and regulatory filings for clues about his investments.
But even the most sharp-eyed observers could be excused for missing a disclosure he made Friday about American Express Co.
The billionaire took out a fine-print ad in the New York Daily News to say he’s seeking permission from the Federal Reserve to hold as much as 25% of the credit-card issuer’s shares. The notice appeared alongside listings for a Brooklyn co-op, a $2,500 Honda Accord and a liquor license application, plus a quarter-page ad for a strip joint.
Of course, Buffett was just obeying the law. Federal regulations require that shareholders seeking to boost their stakes in banks above certain thresholds publish announcements in “a newspaper of general circulation" in the community where the financial institution is based. (AmEx has its headquarters in lower Manhattan.) Still, in an era when so much information flows to investors through online feeds, the back pages of a metro can feel like a place to bury rather than reveal news.
“The law is full of all sorts of public-notice requirements that are fulfilled by small-font ads in printed publications," said Joseph Grundfest, a professor at Stanford University and former member of the Securities and Exchange Commission. “Those requirements are rather silly in our modern day and age."
It wasn’t always that way. The concept of circulating public notices into newspapers began in England in the 17th century, when the Oxford Gazette published announcements from the king’s court, according to the Public Notice Resource Center. In the US, Congress passed a law in 1789 requiring all bills, orders, resolutions and votes be published in at least three newspapers.
This century, as many classified sections withered under Craigslist’s growing shadow, public notices helped prop up revenue for publishers. In 2008, for instance, classified revenue dropped 29% while sales of notices slipped just 4.3%, according to the National Newspaper Association. In recent years, politicians including New Jersey Governor Chris Christie have sought to loosen rules to let more ads appear online—proposals that some papers of record say would devastate them.
Buffett’s ad was brief, leaving it to AmEx to explain that his plan is to hold the same amount of shares. But Berkshire’s ownership stake will climb past 17% as the credit-card company repurchases more of its stock from other investors.
Buffett, whose conglomerate Berkshire Hathaway Inc. owns more than two dozen newspapers, is no doubt aware of the newspaper industry’s reliance on public-notice revenue. So, too, is his longtime business partner, Charles Munger.
During the housing market crash in 2008, a small Los Angeles-based publisher he oversees racked up sales of foreclosure notices at its papers in California and Arizona. The revenue helped the company, Daily Journal Corp., pivot toward technology ventures and make a winning investment in Wells Fargo & Co.
Buffett didn’t respond to a request for comment about why he chose to announce his move in the Daily News. But, for the famously frugal billionaire, it’s easy to see why the venue might appeal. Classified notices in the paper start at $54. Bloomberg