Buffett's Successor Resigns
MELISSA BLOCK, host:
There's been a shakeup at Berkshire Hathaway. Billionaire investor Warren Buffett has run the company for more than 40 years, and top executive David Sokol was considered his likely successor. Well, Sokol resigned today amid questions over a stock purchase.
NPR's Sonari Glinton has the story.
SONARI GLINTON: Inside of Berkshire Hathaway, David Sokol was sort of a go-to guy. He ran several important companies for Warren Buffett. He started off running MidAmerican Energy, a utility company. And when Buffett needed someone to run John Mansville, an insulation and roofing company, he got David Sokol. He needed someone to run Netjets, a timeshare for jets, he got David Sokol.
Mr. DAVID SOKOL: But the reality is what I like to do is build companies, and Berkshire is a place when, if you have my personality, you get pulled into a lot of detail.
GLINTON: That's David Sokol on CNBC's Squawk Box this morning. Let's remember, Berkshire Hathaway is a gigantic conglomerate. It's owns everything from Fruit of the Loom underwear to Geico insurance. It buys companies like you and I buy shoes.
People are often suggesting that Buffet buy companies, including David Sokol, who made a suggestion about a chemical company called Lubrizol. Let's go back to Sokol on CNBC.
Mr. SOKOL: I made a decision to buy some shares. When I mentioned to Warren that I thought there was an opportunity perhaps for Berkshire, I told him that I owned some shares, and frankly, I didn't think he had any interest.
GLINTON: Sokol was wrong. A short time later, Berkshire announced a deal to buy Lubrizol for $9 billion. If Sokol had been Berkshire's investment officer or were on the company's board, which he wasn't, but if he were, it would've been an illegal practice called front-running. That's where...
Mr. BOB MILES: You buy a stock with full knowledge that the stock is going to be purchased in a takeover for a higher price.
GLINTON: Bob Miles has written three books on Berkshire Hathaway and Warren Buffett. Miles doesn't believe Sokol did anything wrong.
Mr. MILES: Because he didn't know that Buffett would agree with him that it was indeed a good value and that he would be offering a premium for the stock.
GLINTON: Many analysts, like Gary Bradshaw, believe the controversy is really is about the bigger worry: Who's going to succeed Warren Buffett, who's 80 years old?
Mr. GARY BRADSHAW (Portfolio Manager, Hodges Capital Management): Shoot, Buffett's going strong. He'll probably outlive us all. But that's not the norm.
GLINTON: Bradshaw is a portfolio manager at Hodges Capital Management in Dallas. He says many on Wall Street view Berkshire Hathaway as a one-man show, and that's a problem.
Mr. BRADSHAW: Is the Detroit Tiger baseball team going to be as good going forward if they've got to put a rookie in as a starter? You know, it applies to having to replace Warren. He'd be a tough bat to replace.
GLINTON: Bradshaw says any news about any one below Buffett gets Wall Street insiders and stockholders worried and asking questions.
Sonari Glinton, NPR News.
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