Buffett's Berkshire Denied Confidentiality by SEC (Update1)
By Miles Weiss
Washington, Feb. 22 (Bloomberg) -- Warren Buffett reported
stakes in Microsoft Corp. and several other companies after the
Securities and Exchange Commission refused to let the billionaire
delay disclosure of these holdings.
Berkshire Hathaway Inc., the Omaha, Nebraska, company
controlled by Buffett, said in a filing with the Securities and
Exchange Commission that it held 167,500 preferred shares issued
by Microsoft at Sept. 30, 1999. The Redmond, Washington, software
company first sold the convertible preferred stock back in
December, 1996.
Buffett and other big investors, such as money manager George
Soros and Microsoft Chairman Bill Gates, rely on a quirk in SEC
reporting requirements that enables them to delay disclosure on
some of their stakes for at least a year. Buffett has used the
loophole to trade shares in American Express Co., Wells Fargo &
Co. and McDonald's Corp.
However, money managers must show that release of the data
would hamper their proprietary trading strategies. And in June,
1998, the SEC sent out a letter stating that it would require more
detailed explanations from those who wished to keep their holdings
secret.
``The SEC has grown a little insensitive to people just
always claiming that disclosing their holdings is going to reveal
a confidential trading strategy,' said Bob Juelke, an associate
at the Philadelphia office of the law firm Drinker Biddle & Reath.
Money managers who handle $100 million or more of stocks must
publicly report their holdings to the SEC quarterly on a Form 13F.
Those managers can apply for permission each quarter to report
some of their holdings on a public form and report others on a
confidential filing whose release is delayed for about one year.
To obtain the confidential treatment, Buffett in previous
applications has said that disclosure of Berkshire's holdings
would enable other investors to follow Buffett's lead, driving up
the price of stocks he is buying. However, Berkshire disclosed
today that the SEC had denied confidential treatment for Form 13Fs
that Berkshire filed during the first three quarters of 1999.
``Berkshire has chosen not to appeal the denial of
confidentiality as to these securities even though Berkshire
believes that its confidentiality request was appropriate,' the
company said in the SEC filing.
Buffett's decision not to contest the SEC ruling suggests
that the stakes disclosed today aren't crucial to his overall
strategy. And the wording of the filing suggests that the SEC did
allow Buffett to report other stakes on a confidential basis.
In addition to the Microsoft stock, the newly released Form
13Fs disclose for the first time that Berkshire held one million
shares in Robert Half International Inc. and 1.86 million shares
in Cox Communications Inc. However, both of these stocks may have
been selected by Louis Simpson, who runs an investment portfolio
for Geico Corp., rather than Buffett.
All of the Robert Half and Cox shares were held under Geico's
name as well as Berkshire Hathaway's at Sept. 30, 1999, according
to the SEC filing. Geico is a Berkshire subsidiary and the two
companies report their holdings on the same filing at the end of
each quarter.
Berkshire officials couldn't be reached immediately for
comment
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