I am not sure if I should answer this inquiry or if it's just a rhetorical question that you posed. So, I'll attempt an answer and hope that the question is not rhetorical.
First I should tell you that I still hold all of my position, indicating that I still have full confidence in the man. After all, this is the man
who has as one of his primary principles that you don’t invest in a company unless you trust the management.
I would assume that the Sokol incident has weighed heavily in the minds of most current investors and those who have tentatively been thinking about taking on a new position. And Sokol’s answer to Joe Kernen, as you’ll see, indicated to any listener that the management of that concern should not be trusted because of the front running that Mr. Sokol did.
You may find that last statement rather harsh. If you do, please avail yourself of the tapes of that show so you can hear his response. I heard him say that Mr. Munger does this all the time. After all, why do you think a person finds such a stock.
If I understand correctly in this case, he did not find such a stock. The name was given to him by Mr. Buffett so that he could look into it. And then, I believe his instructions stated that he was to report to Mr. Buffett privately. At least that is some of the chatter that I picked up from listening to the business news stations.
Joe Kernen interviewed Sokol on Squawk Box and definitively stated that front running had occurred. Sokol replied to him that this goes on at Berkshire Hathaway all the time, so therefore he did nothing wrong. That statement is the key, that this is not just an isolated event. A first grader knows that front running is prejudicial to stockholders in this type of investment. I'll leave the ethics to you. By the way, contrary to the many opinions I’ve heard on the CNBC shows, I personally believe that Mr. Buffett finally took the proper action.
Perhaps the second thing that has been bothering people is that incredulous transaction that took place at CNBC when a family member was awarded half a million dollars because her father had picked all the stocks properly on their contest. I personally posted an item to that effect as I found it less than ethical and that it was open to question which is why television stations normally exclude family members of those who work for the station from participating, and worse yet, receiving prize money. And, in this case, these very people had stated that family members were not allowed in this contest for the reasons already cited. Mr. Kernen repeated those words and sentiments more than once. Yet, all changed when it was time to award the prize.
My wife happened to be watching that morning and saw the presentation and said that if she were running this board, she would write to the company with a strong objection.
For the record, I posted to Mr. Immelt who in turn turned it over to Comcast for action. I only heard that they decided to do nothing about it from Melissa Lee when, much later, she asked someone a very direct question just before station break. Whatever happened to the money, she asked. The lady said we discussed it among ourselves and we decided to do nothing with the money until it was brought up again, and it hasn't been. By ourselves, I assume she meant Joe Kernen, Carl Quintanilla, and Becky Quick.
These 2 events stand out and call attention to situations that might be viewed as less than kosher. Each incident alone may cause investors to think or even worse, postulate, that the old lion has lost his teeth. Otherwise, he wouldn’t be overlooking the obvious.
I personally find it very hard to believe that a man who terminated an employee at Coca Cola for borrowing money and paying it back has taken a blasé attitude in this case. Even though the money was returned, this executive wanted the man punished. I think the soul went to jail. That was one of the criteria that I focused on before I made my investment.
Another one was when his firm was audited by one of the insurance companies. When the auditor arrived unexpectedly, according to the Barron’s article, Mr. Buffett met her at the door, found an office for her, gave her the keys to that office, and allowed her to audit the books. She returned the keys with his documents when she finished, I think it took a week according to the article, and indicated everything was perfect to her employers. The insurance company, one of the major ones, that had sent her was very pleased. If you bother to go back and read the article, I think you will read that Mr. Buffett never attempted to influence or direct or assist in the audit in any way. That sanguine point was made in the article. This guy likes to see himself as being beyond reproach.
Up to this point, Mr. Buffett had enjoyed the respect, admiration, and trust of the participants in the stock market. Each event taken separately is enough to raise the caution flag. Sadly, he has had to face two questionable, independent events that may have shaken people’s trust.
Do you think I was foolish in keeping my position?
The other events that you mention in passing at the opening of your post are certainly serious, however, investors in (BRKA) and (BRKB) are long term investors. Hence, these type of issues are just disregarded by most of them. They are long term players. And, besides he has traversed the turbulence of the market beautifully.
yoss
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