Some exclusive commentary from Berkshire Hathaway on news concerning the
company.
There was a recent report in Pro Publica that suggested
that Berkshire Hathaway Chairman and CEO Warren Buffett traded stocks
in his own portfolio before Berkshires trades,
and the same stocks were made public on 3 occasions
over a period of almost 2 decades.
I haven't confirmed those events or discussed the details of
that reporting with Buffett,
but earlier this week I sat down with Berkshire Vice
Chairman Charlie Munger at his home in Los Angeles for
a project that I'm working on ahead of his 100th
birthday, which is coming up on January 1st.
Munger is the elder statesman and sort of a moral
authority at Berkshire,
so I asked him what he thought of that story.
I don't think there's the slightest chance that Warren Boat
is doing something that's
deeply evil to make money for himself.
He cares more about what happens to Berkshire than he
cares what happens to his own money.
He's getting all his own money away.
He doesn't even have it anymore.
And showing how little he thinks of it does he
give away the last son and brother that he has
on Earth,
and having done that, they save her,
The Dirty son of she's taking advantage of Berkshire to
make money.
It's not a plausible argument.
It's one more ridiculous thing that said about Berkshire.
Pro Publica itself noted that the trades were very small
relative to Buffett's net worth.
Pro Publica has said that his portfolio trades from the
year 2000 to
2019 totaled $466 million. That is less than 1/2 of
1%
of the more than $100 billion
that Buffett is worth now.
And of course, more than
99% of that is in shares of Berkshire itself.
So Charlie's point was it would be silly to argue
that you were
putting yourself an advantage over Berkshire shareholders when all of
your money is in Berkshire shares too.
We've we've made the point when the news came out
about this,
the size and scale of it,
meaning that it was tiny on a very relative basis.
And I don't think that anyone thinks that there was
any kind of insider trading I've always wanted.
Look, my hope is that there's a
very plausible and reasonable explanation for it.
I think that the the issue has was much more
around what he said publicly
around the idea that he doesn't trade in the stocks
that Berkshire owns,
right? And clearly and empirically
it appears at least that he did.
And so trying to understand that and then how does
that
relate not to, you know,
there were other, there were other individuals at Berkshire including
Give Sokol who was involved in Lubrizol.
He had owned shares in a company before they ultimately
acquired
it. I think it's a I think there's a difference
and
you remember, I haven't spoken,
you remember about it. David Sokol wasn't accused of anything
either in terms of he brought a deal to the
company.
If you go back to and I looked at the
Sokol details in a long time but David Sokol brought
a deal to the company
didn't disclose to I guess Buffett and whoever else he
was bringing that deal to that he had already bought
stake in the company,
bought shares in the company so and Berkshire bought it
at a higher price and that was I imagine that
that Warren.
I want to believe that Warren trades in his own
account the way Joe plays DraftKings just for fun.
That's what happens just for fun as much as it's
funding.
Remember he's got a he's got a salary of the
same amount of getting right.
It's the same amount of
I get very interested in $5 bets and it's not
because of the $5,
it's I just want to be able to be.
I think I'm going to be able to figure things
out.
I can even, I can even try to rationalize without
knowing the I mean without actually knowing what happened,
that there were times where possibly he was
selling shares that he owned ahead of Berkshire buying the
shares because he didn't want to own them at the
same time.
That's one thought. And then there's another thought that maybe
he was selling shares 'cause he if the if Berkshire
was out of the the stock,
he thought that he should be out.
I mean I I could come up with 100 reasons
why maybe this is all haven't a good.
The only thing is that he,
because he was so emphatic publicly to his shareholders that
he wasn't in these stocks,
right. He was not going to be trading any of
these stocks in.
Look, my hope is, as I said,
that there's a very reasonable explanation for this.
There was a mistake such or that he had bought
these shares.
I have a view, there's my own supposition that maybe
he bought these shares a million years ago and then
decided that he wanted to get out of it for
whatever reason. Question. And the timing of it was just
not great.
My guess is some of it was probably for charity.
When he gives some of these maybe
but irrespective he's going to have to answer.
But irrespective of whatever it is the problem or the
conundrum
give it's it's only because he has a policy for
the company.
I assume for that that policy for the company also
applies to every other employee at the company.
And then the question is does it apply to him.
We talked about David Sokol and again,
I'm not saying this was a David Sokol situation,
but David Sokol didn't disclose this to the board
or to to Warren. Warren clearly disclosed it to himself
because he knows,
right. Did he disclose to the board?
Maybe he by the way maybe.
Very well he wrote a letter.
By the way people have done this where situations that
people have owned chairs from a million years ago and
they need to get rid of them somehow and they
write a letter to somebody saying I'm on the X
date I'm going to go do this maybe there's some
wreck.
I have no idea. All I'm saying is that hopefully
there's a
very reasonable explanation for it at some point.
He does not speak such a
but it's so de minimal.
I mean we can't even the we don't.
We need a word for how de minimis it is.
It's exponentially, logarithmically. It's it's a pittance.
And I would say why even do it.
Why not do paper trades and not even but that
doesn't work.
I try to do paper trades and it doesn't work.
I I try to hope for one team or the
other and think something's going to happen unless I put
I I bet the other night I bet $4.00 on
something and I won 35.
But you have a problem.
No, it's I like I get interested in,
I'm betting on mid American conference football Buffalo versus Central
Michigan.
You want to care about it.
Yes, yes. And I want to watch it and I
understand that.
Look the answer is Buffett is going to be asked
about this at some point.
It is something that's going to come up.
I was out talking to Charlie about something else.
I didn't feel like I couldn't ask him about it,
but I will tell you I just like straight
he hadn't read the story.
Like what he prefaced that with was.
I said, did you hear,
did you read the story And he said,
no, I haven't read it.
But then it's just like a size.
I don't even know if you know
what what. Well, that's actually,
by the way, an interesting point though,
because if an article like that were to come out,
you would think and you were the CEO of a
company,
whatever age, you probably would want to communicate to your
board what's going on with those trades.
Given that that's the company policy at almost any company,
actually, in America, if your CEO was in an article
doing things that were against the company,
ostensibly against the company's policy,
you would be telling the rest of the board and
the board would be cognizant that that happened,
right, That that is actually a worthy point being made.
Because I think in a Fortune 500 company in America
today,
that's actually something that people would
he's not your average. Well,
but that's not your average CEO.
And then the question is right,
are you in a league of your own?
And if you're a league of your own,
maybe then there are no rules,
I'm just saying. But that is an illegal
zone.