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Sokol Resigns at Berkshire March 31, 2011

Posted by shaferfinancial in Finance.
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David Sokol, a key manager at Berkshire resigned. The timing of the resignation makes it clear it was the result of Sokol’s purchase of Lubrizol stock prior to Berkshire’s buyout. This is probably not illegal, but is definitely a breach of ethics. Sokol should have sold his stake in Lubrizol once learning that Buffett was acting on his suggestion to buy the company. The $3m profit he made is most likely a small amount of his personal fortune and hardly worth the trouble he had to know would ensue. Sokol was thought to be a leading candidate for taking over part of Berkshire after Buffett. This is pure speculation and Sokol said he had no interest in the job. His most immediate job at Berkshire was turning around NetJets in which he received much praise from Buffett.
This will probably cause a small short term decline in the value of Berkshire. More concerning long term is who will take over at MidAmerican and NetJets. This does not change my outlook on Berkshire, but does provide an example of how fast and emotionally the market reacts to news.

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