Specifically, he was annoyed that The Wall Street Journal would not cover the results of his conglomerate Berkshire Hathaway — "even though such earnings were one hundred or more times the level of some companies whose reports they regularly picked up".
Buffett resolved the situation in 1979 by listing his stock on Nasdaq. Then the Journal started paying attention. "This solves a dissemination problem that had bothered us," he wrote in a letter to shareholders that year.
Seldom again in the following four decades has Buffett suffered from a lack of attention. News organisations, blogs and avid fans hang on his every word.
But elsewhere the dissemination problem persists. Sometimes companies are the victims. Sometimes they are the perpetrators.
In the first category, smaller companies are being deprived of analyst coverage as investment banks slash their research budgets. The problem has been compounded by EU rules preventing banks from bundling research with other services. As a result, smaller public companies can struggle to attract attention.
But unlike Buffett in 1979, who chose to make his stock more liquid and enjoy more publicity, thousands of other companies today are deliberately taking the opposite tack: going private and enjoying obscurity.
Being private does not guarantee total secrecy everywhere. In the US, multibillion-dollar companies such as Koch Industries can hide their income statement from prying eyes; in other countries including the UK, private companies still have to publish results. But the deadline is relaxed, enforcement is uneven and some of the largest private companies have lobbied for the rules to change.
Private or public, companies are practising more selective disclosure. This week alone the employee-owned UK retailer John Lewis Partnership announced it would stop its decade-old practice of publishing weekly sales figures. Publicly owned Volkswagen said its brands would stop releasing monthly sales.
Meanwhile, three of the largest public companies in the world gave only a selective disclosure during their quarterly earnings.
Apple produced its latest blockbuster results but omitted to say how many iPhones it sells. It stopped providing the data a year ago.
Microsoft gave a niche data point that it was opening a data centre in Qatar but not the more useful revenues of Azure, its giant cloud business.
Facebook did not disclose revenues for Instagram, its star site, and this year will stop disclosing how many people visit its main site.
So the shutters come down and investors are deprived of highly relevant information. The shift to the shadows is a shame. Executives tempted to disclose less might consider the words of Buffett in another shareholder letter: "We will be candid in our reporting to you . . . Our guideline is to tell you the business facts that we would want to know if our positions were reversed. We owe you no less."
Written by: Tom Braithwaite
© Financial Times
