David Sokol, the former Warren Buffett heir apparent, is on CNBC.For background of his departure, see here.
We’re covering live. Refresh for the latest.
Q: Why did you resign?
Sokol: This has been in the works for 2.5 years. Berkshire is a fabulous company. What I like to do is build companies. I’ve wanted to use my family money to build a mini-Berkshire. After initial talk of resignation, Buffett asked me to turn around NetJets, and I couldn’t say no.
Q: Do you know that you weren’t the name in the envelope (next CEO)?
Sokol: No idea. It’s never been discussed.
Q: Why didn’t they try to talk you out of it this time?
Sokol: No real answer, except to confirm that they didn’t try. As for replacing Warren one day, he notes that Warren isn’t going anywhere anytime soon. Whoever replaces Warren won’t be able to do it the way he did it.
Q: The Lubrizol question…
Sokol: This was only in the press release, because it was going to come out when the Lubrizol vote happened, so only wanted to get it out of the way. I’ve never had any investment authority at Berkshire.I first heard of Lubrizol LAST FALL, when I pulled their 10-K and found it interesting. (Note: This is different than the first timeline where he first got interested in Citi.)
Originally I put an offer in for 50K shares at $104. Only 2300 went off. About a week later, I was doing tax planning so I sold. After stock price came down, bought more.
Explaining how eventually he had meetings with Lubrizol CEO. Reiterates that upon telling Warren about Lubrizol, he had told him he had shares and made that clear, and that he had no ability to do buying on his own.
“The reality is that he has no control over a deal ever happening.”
NOTE: This could be a crucial question. Does the fact that he doesn’t vote on deals or have any investment discretion actually mean he doesn’t have any influence on Berkshire deals.
Sokol: I don’t believe I did anything wrong. Charlie Munger owned 3% of BYD before he asked me to go look at it.
As for how Warren Buffett learned of the details of Sokol’s stake in Lubrizol, it was the result of Lubrizol disclosing them to Buffett when the deal happened.
Q: Has the SEC contacted you?
Sokol: No. Don’t think it was illegal, unethical, and I thought there was a less than 5% chance of Buffett being interested.
Q: How have you brought to Warren?
Sokol: 8 or 9 over the last 10 years.
Q: Why resign now if it’s not about Lubrizol?
Sokol: Annual meeting coming up soon. Just a good time to move on. Conversation switches to NetJets.
Q: Does Berkshire need stronger internal controls?
Sokol: Nope. The speed of Lubrizol was a bit unusual, but everything was standard.
And that’s that.
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