November 29, 2023

A Conspicuous Absence at Berkshire Meeting

Mr. Sokol will not attend Berkshire’s meeting this weekend. He announced his resignation abruptly last month after reports emerged that he had made a profit by buying the stock of a company in his own account shortly before Mr. Buffett announced he was buying the company.

The sudden downfall came as a surprise to outsiders who had watched Mr. Sokol rise in the business world. He helped build a small Omaha energy business into a multibillion-dollar corporation, sold it to Berkshire Hathaway and by all appearances became one of his boss’s favorite executives. Mr. Sokol served as Mr. Buffett’s Mr. Fix-it, a turnaround artist trusted to tackle difficult jobs.

But people who worked for Mr. Sokol saw a side of him that Mr. Buffett perhaps did not. His brass-knuckled approach alienated some Berkshire employees, as when he suggested that people with an illness or other personal problems were problematic and when he unceremoniously fired a top executive and made him leave the office that day.

Flashes of his management style can be found in some earlier litigation as well. In one civil case, a judge rebuked Mr. Sokol for tampering with his company’s numbers so that a joint-venture partner would get a smaller payout. In another case, Mr. Sokol sued to find out which employees at a Berkshire unit were disparaging him.

And he irritated colleagues at two of Berkshire’s subsidiaries, Johns Manville and NetJets, by frequently invoking Mr. Buffett’s name to burnish his own image inside the company.

Some people at Berkshire were puzzled over why Mr. Buffett favored him so much, as when he credited Mr. Sokol for a turnaround of Johns Manville even though the unit’s profits fell sharply after he took over.

Now, Mr. Sokol’s trading is under investigation by the Securities and Exchange Commission, according to two people close to the inquiry who would speak only on the condition of anonymity because they were not authorized to speak publicly. So the question of just what Mr. Buffett saw in Mr. Sokol — and why he has supported him publicly — will surely be a persistent topic of conversation this weekend in Omaha, at the usually jubilant occasion known as the Woodstock of Capitalism.

Shareholders’ questions may cast a pall over the peppy affair as they consider the conduct of Mr. Sokol, who was already wealthy and was on the cusp of running one of America’s most respected companies. “The reasons behind Sokol’s actions are a mystery,” said Whitney Tilson, a fund manager and longtime Berkshire shareholder.

“At the very least, he exercised very poor judgment.”

Mr. Sokol has said that he resigned to focus on family investments and that the stocks were a good investment for his family that he would do again. He did not respond to questions sent by e-mail or to phone messages for this article.

In some ways, Mr. Buffett and Mr. Sokol seem to share many similarities, suggesting an easy familiarity.

They were both born and raised in Omaha, Neb., and still reside there. Each man credits their early jobs as newspaper delivery boys and grocery store clerks, with instilling a strong work ethic. Their business writings are filled with homespun aphorisms.

But there are marked differences as well.

Mr. Buffett, one of America’s richest men according to Forbes magazine, owns one home, which he bought in 1958 for $31,500.

Mr. Sokol collects houses, including one near Jackson Hole, Wyo., the upscale ski resort town, and a waterfront home in Fort Lauderdale, Fla., where he docks his yacht.

While Mr. Buffett is a homebody whose favorite leisure pursuit is playing bridge on his computer, Mr. Sokol’s passion is hunting. Last month he went on a hunting trip to New Zealand.

They also have different views of investment bankers. Mr. Buffett takes frequent potshots at them and boasts about striking multibillion-dollar deals without using advisers.

While at Berkshire, Mr. Sokol relished his dealings with Wall Street. He flew frequently to New York for rounds of meetings with bankers pitching deals.

Late last year, one of those discussions bore fruit. A meeting with Citigroup bankers led to Berkshire’s $9 billion acquisition of Lubrizol, a chemicals company.

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