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Breaking News      Shadows Emerge As David Sokol Part Ways With Berkshire Hathaway And Warren Buffett
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03 April 2011
 
Shadows Emerge As David Sokol Part Ways With Berkshire Hathaway And Warren Buffett
 
Since 1999 David Sokol and Warren Buffett have turned businesses around from outdated, unprofitable ventures to cash cows.  Last week 81 years old, Warren Buffett’s retirement plan seems have been thrown into disarray as his heir apparent, David Sokol unexpectedly resigned.
 
There must be no more difficult decision than the once Buffett must make in handing over control of a company that he has been building since buying Berkshire Hathaway, in 1962.
 
Over the past 12 years David Sokol and Warren Buffett have worked together identifying undervalued or underutilized companies and turning them around.
 
Just three years ago Sokol was asked to assess a small Chinese company, BYC, a battery manufacturer.  After a due diligence Berkshire Hathaway invested $230 million, and between 2008 to 2011 the value of that stake has grown to an astonishing $1.5 billion.
 
It’s been deals such as this that has enabled share holders to celebrate the enormous growth of their share value.  Each year since 1965  the shares have risen in value by an average of 20.2%.
 
With a strong track record Sokol was seen as the heir apparent, ready to take the helm of the company as Buffett retired.
 
Yet in a surprise move, even to his friend Buffett, David Sokol has shocked share holders by tendering his resignation. 
 
It’s not the first time that Sokol has tendered his resignation.  

 
There have been two other occasions, yet on both he was encouraged to remain in his position by the company’s board.
 
This time it maybe a very different outcome as rumors have emerged that a deal involving an investment by Sokol is being investigated by the US Securities and Exchange Commission.
 
On March 14 Berkshire Hathaway announced publicly that it has bought a chemical company, Lubrizol,

for $9 billion, just days after Sokol had made an significant investment.  It’s believed he walked away with $3 million profit from the deal.

 
Any relationship between the Lubrizol deal and his resignation has been strongly denied by Sokol who stated that he had disclosed all his dealings with the company to Berkshire Hathaway.
 
His desire now he told the company was to focus on his own investments and increase his involvement in philanthropy. 
 
In 2008 Sokol was recognized for his commitment to football and was awarded the American Football Coaches Foundation CEO Coach of the Year award.

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References:

http://www.bbc.co.uk/news/business-12920289

http://www.businessspectator.com.au/bs.nsf/Article/Warren-Buffett-David-Sokol-Berkshire-Hathaway-Lubr-pd20110403-FK6XP?opendocument&src=rss

Fortune on David Sokol

History of Berkshire Hathaway

http://www.istockanalyst.com/finance/story/5007203/berkshire-hathaway-brk-vision-and-value

http://www.afca.com/ViewArticle.dbml?DB_OEM_ID=9300&ATCLID=1481559

http://www.istockanalyst.com/finance/story/4966236/why-did-berkshire-hathaway-buy-lubrizol-for-9-billion

http://www.investmentnews.com/article/20091228/FREE/912289991

 
 

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