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Sokol: I Quit to Start My Own Mini Berkshire Hathaway

Thursday, 31 Mar 2011 08:29 AM

The high-ranking Berkshire Hathaway executive who suddenly resigned this week says he wants to start his own investment firm patterned after Warren Buffett's company.

David Sokol appeared on CNBC Thursday, one day after Buffett announced that Sokol had resigned. Many investors believed that Sokol had been the leading candidate to eventually replace Buffett as Berkshire Hathaway's CEO.

Sokol said he has been thinking of resigning for more than two years, and the time was right now because the Berkshire subsidiaries he oversaw are all in good shape. He has been chairman of Berkshire's MidAmerican Energy, NetJets and Johns Manville units.

Sokol told CNBC he wants to set up "mini Berkshire Hathaway" similar to the investment partnership Buffett set up in 1965.

Sokol says he likes to build companies, and never aspired to be Berkshire's CEO or even had a conversation with Buffett or any board member about the job.

"Nobody's going to do it as well as Warren does. And there's going to be a lot of change that comes with that," Sokol said. "The reality is Warren's not going anywhere. He's in great shape."

Sokol also answered questions about Lubrizol stock trades he made before Berkshire announced its $9 billion acquisition of the specialty chemical company.

Buffett said he learned March 19 that Sokol bought 2,300 shares of Lubrizol in December one day after he asked an investment banker to contact the specialty chemical maker about possible deal talks. Sokol sold those initial shares a week later, but then bought nearly 100,000 Lubrizol shares in early January about a week before recommending that Berkshire make a bid.

Buffett said the decision, announced March 14, to offer $135 in cash for each share of Lubrizol was entirely his, but that the deal wouldn't have happened without Sokol's early efforts.

Sokol said Thursday that the details of his Lubrizol trades were disclosed in Buffett's statement Wednesday as part of an effort to be transparent with investors because his ownership would have been revealed when the deal was voted on.

Sokol said that at the time he invested in Lubrizol he didn't have any idea Berkshire would actually buy it. Sokol said Buffett has rejected several previous investment ideas he presented.

"I made the decision to buy the shares because I thought it was a good investment for my family and would do it again tomorrow," Sokol said. He stands to make roughly $3 million on the Lubrizol stock if Berkshire's acquisition goes through.

Buffett said he doesn't believe those stock purchases were illegal and weren't a factor in Sokol's decision to leave.

Buffett said in statement Wednesday that Sokol had tried twice before to resign, most recently about two years ago, but Buffett and other board members convinced him to stay with the company. He accepted Sokol's resignation this time.

Buffett declined to comment beyond his statement. He has repeatedly praised Sokol's work for Berkshire over the years, and he reiterated that praise in the statement.

Berkshire Hathaway's Class B shares fell $1.75, or 2.1 percent, to $83.71 in pre-market trading.

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The high-ranking Berkshire Hathaway executive who suddenly resigned this week says he wants to start his own investment firm patterned after Warren Buffett's company. David Sokol appeared on CNBC Thursday, one day after Buffett announced that Sokol had resigned. Many...
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2011-29-31
 

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