Tag Archive | "berkshire"

Opening Bell: 05.02.11

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Buffett Seeks To Limit Damage (WSJ)
In contrast to his March 30 remarks, when he said he thought Mr. Sokol’s actions weren’t “in any way unlawful,” Mr. Buffett on Saturday called Mr. Sokol’s actions “inexcusable” and said they violated the company’s insider-trading rules and code of ethics. He said Berkshire had turned over “some very damning evidence, in my view” about Mr. Sokol’s trades to the SEC. Mr. Sokol maintains he did nothing wrong, and his attorney late Saturday released a statement calling Mr. Buffett’s stance a “resort to transparent scapegoatism.”

Buffett Extols Berkshire’s CEO Candidates, Faults Sokol’s Trades (Bloomberg)
“There is no real chance the next CEO comes from outside of Berkshire,” the 80-year-old billionaire said yesterday at a press conference in Omaha, Nebraska, site of the company’s annual meeting. “If you picked the worst of the candidates we have, that person would be very, very good.”…Sokol’s stock deals, which Buffett called “inexplicable” considering his wealth, depleted Berkshire’s list of possible CEOs. Berkshire said in February that it had four candidates, without identifying them. “The leading candidate right now, I would lay a lot of money on him being straight as an arrow,” Buffett said at the April 30 meeting.

Buffett: Failure To Raise Debt Ceiling Is Asinine (Reuters)
Warren Buffett said he expects the Congress to raise the nation’s debt ceiling before it expires in mid-May, and said it would be that body’s “most asinine act” ever if it failed.

The Berkshire Hathaway Annual Meeting (Deal Journal)
A question about what Berkshire is doing to protect against the fall of the dollar. Buffett in the past has bet against the U.S. dollar, but said he’s lately been inactive in foreign exchange markets. “There’s no question the purchasing power of the U.S. dollar will decline over time. The only question is at what rate, Buffett said. But other currencies will decline too, and he said he doesn’t have strong feelings about which ones will decline faster or slower. Buffett ends by saying he’d rather be in the U.S. right now than any other place or any other time in history.

Osama Bin Laden Killed in Pakistan, Obama Says (Bloomberg)
Al-Qaeda leader Osama bin Laden was killed in Pakistan yesterday in a firefight with a team of U.S. operatives who raided the compound where he had been hiding, President Barack Obama said. “On nights like this one we can say to those families who have lost loved ones to al-Qaeda’s terror: Justice has been done,” Obama said in a late-night televised address from the White House.

Bin Laden Was Found At Luxurious Pakistan Compound (Reuters)
Few windows of the three-story home faced the outside of the compound, and a terrace had a seven-foot (2.1 meter) privacy wall, officials said. “It is also noteworthy that the property is valued at approximately $1 million but has no telephone or Internet service connected to it,” an administration official said. “The brothers had no explainable source of wealth.”

Buffett, Charlie Munger’s Share Thoughts On Trump (Reuters)
The biggest laughs of the day came from a question on Trump’s prospects for the White House. “Obviously, I think he’s a jerk,” Berkshire’s Vice Chairman Charlie Munger said, with Buffett adding in a more diplomatic way that he did not expect Trump to win the presidency.

Trump Says He’s Decided ‘In My Mind’ To Pursue Presidency (Bloomberg)
“In my mind, I have already decided,” Trump, 64, said in a telephone interview yesterday. “I am going to announce. But I can’t do anything until the show ends.”

Abu Dhabi, Hedge Funds to Back Glencore IPO (Reuters)
The listing, which could be London’s biggest ever, will be aided by strong support from cornerstones, who could buy nearly 30 percent of the shares sold — or some $3.6 billion worth, if the listing raises its maximum target of $12.1 billion.

Facebook Numbers Feed IPO Outlet (WSJ)
Lou Kerner…pegged Facebook’s profit margin—in earnings before interest, taxes, depreciation and amortization—at about 50%. He said Ebitda should be $1.95 billion this year, and he estimated the company’s value in the public market would be $112.9 billion.

Greece Suggests EU/IMF Repayment Extension (Reuters)
In an interview with French daily Liberation published a day ahead of an inspection visit by the lenders, Papaconstantinou became the first Greek official to float the idea of a further easing of conditions on the 110 billion rescue.

Seth Meyers’ White House Correspondent’s Dinner Speech (TRB)

After Roasting, Trump Responds In Character (NYT)
“Seth Meyers has no talent,” Mr. Trump said in an interview on Sunday. “He fell totally flat. In fact, I thought Seth’s delivery was so bad that he hurt himself.”

Article courtesy of Dealbreaker

Berkshire Hathaway Was Just Kidding When It Said David Sokol Hadn’t Done Anything Wrong

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The audit committee has concluded he “violated the company’s standards of ethics” vis-a-vis the whole Lubrizol incident.

Berkshire Hathaway audit report

[via Dealbook]

Article courtesy of Dealbreaker

Goldman Sachs Officially Pays Back Warren Buffett

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On the heels of a no good very bad month that’s included a (former) lieutenant causing trouble and his beloved All My Children getting canceled, Goldman Sachs has really put the icing on Warren Buffett’s cake.

The bank apparently bought back the preferred stock it sold Berkshire Hathaway when things got tense in 2008. As Goldman and Wall Street were in a bit of a bind at the time, Buffett was able to demand a set-up that made him more than $15 a second. That gravy train officially ended today, when GS sent WB $5.5 billion, not even having the decency to make him feel better about it by sending a camera crew, some balloons, and couple of employees bearing a massive cardboard check, doing this thing up Publisher’s Clearing House-style. [CNBC]

Article courtesy of Dealbreaker

Can David Sokol Really Be Expected To Recall Everything He Knew About The Lubrizol Deal And When?

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When David Sokol, the Berkshire lieutenant thought to be the frontrunner for Warren Buffett’s job resigned two weeks ago, Buffett sent a letter mentioning that Sokol owned a bunch of shares of Lubrizol, which he had bought before pitching WB on the idea for the company. Sokol says he didn’t know much or how Buffett would react or if there was a snowball’s chance in hell BRK would acquire the company, or if anyone would even take this thing seriously. Turns out he may have had some reason to at least have a hunch.

In the March 30 letter, Mr. Buffett wrote that Mr. Sokol bought nearly 100,000 Lubrizol shares in January, just before recommending the industrial manufacturer as a potential takeover target. But the letter never mentioned that Mr. Sokol knew Lubrizol’s chief executive was planning to talk to the company’s board about a possible deal with Berkshire — and that he knew a few weeks before buying $10 million of stock for his personal portfolio. The Lubrizol preliminary proxy, filed on Monday, revealed for the first time that Citigroup told Mr. Sokol about such discussions in December.


Article courtesy of Dealbreaker

Write-Offs: 04.06.11

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$$$ Rajaratnam Gains Totaled $63 Million, FBI Agent Testifies [Bloomberg]

$$$ Berkshire Scandal Hints at Potential Gaps in Disclosure Laws [WSJ]

$$$ Fed Begins Selling Off Billions of AIG Mortgage Assets [NetNet]

$$$ LeBron James in Deal With Fenway Sports [WSJ]

$$$ Bailouts: The Investment Banker Employment Act of 2008 [MarketPlace]

$$$ 75 year old killed Georgia, Armenia internet [TL]

Article courtesy of Dealbreaker

Berkshire Hathaway Vice Chairman Charlie Munger Stayed Out Of Talks Involving A Company He Owned Shares Of, Unlike *Some People*

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Don’t try and drag him into this one, pipsqueak.

Berkshire Hathaway Vice Chairman Charles Munger said his family was invested in BYD Co. “for years” before his company took a stake in the Chinese automaker and that he disclosed the financial interest to his business partner Warren Buffett. “I certainly suggested that Berkshire look at investing in something that the Mungers were already invested in, but we’d been in it for years,” he said today in a telephone interview. The Munger investment was cited last week by former Berkshire manager David Sokol in a CNBC interview as precedent for his purchase of Lubrizol Corp. shares before recommending the company as a takeover target to Buffett. Sokol, whose resignation from Omaha, Nebraska-based Berkshire was announced by Buffett on March 30, said there was nothing unethical about purchasing about 96,000 Lubrizol shares in January.

“I don’t believe I did anything wrong,” Sokol said, according to a transcript on CNBC’s website. “Mr. Munger owned a significant piece of BYD before he mentioned it to me to go look at it.”

“I had Dave look at it, because I knew I couldn’t talk Warren into buying into the damn thing by myself,” Munger said. “It’s a new technology-type investment. But David went over there, and he made the deal for Berkshire.” Buffett is Berkshire’s chairman and chief executive officer.

Munger Says He Told Buffett Of BYD Stake, Stayed Out Of Talks [Bloomberg]

Article courtesy of Dealbreaker

Let’s Do Warren Buffett A Solid

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As you may have heard, yesterday afternoon Warren Buffett announced the resignation of top lieutenant David Sokol, thought to be the frontrunner to take over Berkshire Hathaway when Buffett retires. In his statement, Buffett disclosed that Sokol bought himself a bunch of shares of Lubrizol before suggesting Berkshire make an investment, which they ultimately did. Buffett says to his knowledge nothing “unlawful” happened, though he’s more than likely a little pissed that Sokol’s actions have resulted in 9,197 stories in the last 12 hours about whether or not “the Berkshire brand has been damaged.” Other than yesterday’s press release, Buffett hasn’t made any further statements on the matter. He probably will feel the need to at some point but at this time may himself not even know what to say. He’s struggling for the words and could use some help. Well help is on the way.

In addition to being known as one of the most loved and revered businessmen- some would say- ever, a savvy investor and a lover of Cherry Coke, Buffett is known for one thing above all else– going out of his way to awkwardly marry aberrant sex fetish with folksy business wisdom. Some of his greatest hits include telling Bloomberg, on the matter of why people should want to sell their companies to BRK, “You can sell it to Berkshire, and we’ll put it in the Metropolitan Museum; it’ll have a wing all by itself; it’ll be there forever. Or you can sell it to some porn shop operator, and he’ll take the painting and he’ll make the boobs a little bigger and he’ll stick it up in the window, and some other guy will come along in a raincoat, and he’ll buy it.” Telling investors, of the housing crisis, “As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out.” Telling CBS, on the topic of bridge: “You know, if I’m playing bridge and a naked woman walks by, I don’t even see her. Don’t test me on that!” Telling Forbes, in 1974, on stocks being undervalued: “[I feel] like an oversexed guy in a whorehouse.” [Forbes changed "whorehouse" to "harem."]

So that’s his comfort zone, that’s what people expect of him, and whenever he does decide to say something, whether it’s later this week on CNBC or in May at the annual Berkshire Hathaway shareholder meeting, it’s got to be in the style that signals to people that Uncle Warren is here and it’s going to all be okay.

But with his mind clouded at the moment, it falls on us to draft some statements. Such as:

* “Buying a bunch of shares of a company before convincing Berkshire Hathaway to do the same and subsequently making a nice personal profit off it is a lot like playing bridge with a harem of naked women in a whorehouse. It’s irresponsible, maybe a little dangerous, but highly profitable.”

* “Buying a bunch of shares of a company before convincing Berkshire Hathaway to do the same and subsequently making a nice personal profit off it is a lot like using your kinkiest moves on a busted Daytona stripper in the bathroom of a local dive bar. It seems like a good idea at the time but you ultimately end up feeling really dirty and possibly diseased afterward.”

* “I don’t condone what Sokol did but I can understand it. The timeline of David’s actions- buying a bunch of Lubrizol, initiating meetings with Citigroup, then coming to me and telling me Berkshire should get in on it, knowing he was about to making himself a little killing is a lot like meeting a girl at a bar, buying her drinks, taking her home knowing you’re going score and despite having a sinking feeling that something is off, and that you see something that looks like an Adam’s Apple, convincing yourself that it’s just a shadow, as you’re already in too deep.”

* “While nothing illegal went down on Berkshire’s watch, what David did is not the way we expect people to conduct themselves and it certainly left a bad taste in everyone’s mouth. Not unlike what I imagine would be the result of some boyhood experimentation on the farm and a cow with some funky tasting spunk.”

Surely you can do better.

Article courtesy of Dealbreaker

David Sokol: I Did Nothing Wrong But…

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“Knowing today what I know, what I would do differently is I just would never have mentioned it to Warren, and just made my own investment and left it alone.”

“Knowing today what I know, what I would do differently is I just would never have mentioned it to Warren, and just made my own investment and left it alone. I think that’s a disservice to Berkshire, but if that’s what people want to do in the future, that’s fine. You can’t — or at least I don’t think you can executives to not invest their own family’s capital in a company that Berkshire had no interest, or even knowledge of, and somehow police that. The only thing you can do is just say if you invest your own money, don’t ever mention it to anyone at Berkshire. That doesn’t make sense to me either, but that’s certainly what it sounds like.”

Sokol Speaks On Surprise Exit [CNBC]

Article courtesy of Dealbreaker

One Of Three Guys In The Running To Succeed Warren Buffett Resigns From Berkshire Hathaway

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David Sokol has left the building. Here’s the note on the matter from WB. Apparently there’s a question about some buying and selling of Lubrizol on Sokol’s behalf, which Buffet says, to his knowledge, was in no way “unlawful.”

This press release will be unusual. First, I will write it almost as if it were a letter. Second, it will contain two sets of facts, both about Dave Sokol, Chairman of several Berkshire subsidiaries.

Late in the day on March 28, I received a letter of resignation from Dave, delivered by his assistant. His reasons were as follows:

“As I have mentioned to you in the past, it is my goal to utilize the time remaining in my career to invest my family’s resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests. I have no more detailed plan than this because my obligations from Berkshire Hathaway have been my first and only business priority.”

I had not asked for his resignation, and it came as a surprise to me. Twice before, most recently two or so years ago, Dave had talked to me of resigning. In each case he had given me the same reasons that he laid out in his Monday letter. Both times, I and other Board members persuaded him to stay. Berkshire is far more valuable today because we were successful in those efforts.

Dave’s contributions have been extraordinary. At MidAmerican, he and Greg Abel have delivered the best performance of any managers in the public utility field. At NetJets, Dave resurrected an operation that was destined for bankruptcy, absent Berkshire’s deep pockets. He has been of enormous help in the operation of Johns Manville, where he installed new management some years ago and oversaw major change.

Finally, Dave brought the idea for purchasing Lubrizol to me on either January 14 or 15. Initially, I was unimpressed, but after his report of a January 25 talk with its CEO, James Hambrick, I quickly warmed to the idea. Though the offer to purchase was entirely my decision, supported by Berkshire’s Board on March 13, it would not have occurred without Dave’s early efforts.

That brings us to our second set of facts. In our first talk about Lubrizol, Dave mentioned that he owned stock in the company. It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings.

Shortly before I left for Asia on March 19, I learned that Dave first purchased 2,300 shares of Lubrizol on December 14, which he then sold on December 21. Subsequently, on January 5, 6 and 7, he bought 96,060 shares pursuant to a 100,000-share order he had placed with a $104 per share limit price.

Dave’s purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea. In addition, of course, he did not know what Lubrizol’s reaction would be if I developed an interest. Furthermore, he knew he would have no voice in Berkshire’s decision once he suggested the idea; it would be up to me and Charlie Munger, subject to ratification by the Berkshire Board of which Dave is not a member.

As late as January 24, I sent Dave a short note indicating my skepticism about making an offer for Lubrizol and my preference for another substantial acquisition for which MidAmerican had made a bid. Only after Dave reported on the January 25 dinner conversation with James Hambrick did I get interested in the acquisition of Lubrizol.

Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.

Dave’s letter was a total surprise to me, despite the two earlier resignation talks. I had spoken with him the previous day about various operating matters and received no hint of his intention to resign. This time, however, I did not attempt to talk him out of his decision and accepted his resignation.

Effective with Dave’s resignation, Greg Abel, presently President and CEO of MidAmerican Holding Company, will become its Chairman; Todd Raba, President and CEO of Johns Manville, will become its Chairman; and Jordan Hansell, President of NetJets, will become its Chairman and CEO.

I have held back nothing in this statement. Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release.

Berkshire Hathaway and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.


Article courtesy of Dealbreaker

Write-Offs: 03.18.11

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$$$ Goldman Sachs Code Thief Gets 8 year, 1 Month In Jail [WSJ]

$$$ Does Anne Hathaway Drive Berkshire Hathaway’s Stock? [The Atlantic]

$$$ Global Intervention Slows Yen’s Rise [WSJ]

$$$ Harvard MBA Index Flashes ‘Sell’ Warning [NetNet]

$$$ Sushi Restaurants Drop Japanese Fish on Radiation Fears [Bloomberg]

$$$ BofA Credit Chief Plots Fund [AR]

$$$ Insider Trader’s Biopic At Risk [WSJ]

$$$ Apple, Google May Profit on a Tax Holiday [BW]

$$$ Hurd Letter In HP Lawsuit May Be Unsealed [Bloomberg]

$$$ Stephen Schwarzman: Good Growth Ahead For US [CNBC]

Article courtesy of Dealbreaker