David Sokol, long seen as a contender to take over as CEO of Berkshire Hathaway
Sokol had bought shares of Lubrizol just before pitching the idea to Buffett in mid January. Buffett ultimately decided to buy the company. Although Sokol had mentioned in passing that he owned shares, he did not mention when he had bought them.
Below are comments from analysts, portfolio managers, and other experts:
MATT MCCORMICK, PORTFOLIO MANAGER AT CINCINNATI-BASED BAHL GAYNOR INVESTMENT COUNSEL:
It's obviously very surprising. ... It's a surprise to the market, however ... if there's any impact it'll be short-term and fleeting. Buffett has a such a stellar and well-deserved reputation, I don't think that (Lubrizol question) is a material issue.
The hard part is, if I had any knock against Buffett, is how much he espoused his successor, how this was the right guy, how much he rallied the flag around him as his successor... and now this guy is gone.
It's not an easy job, I don't think I would want it. ... I think the market's going to say this -- it's not really going to react. It'll wait to see who the next successor is, and find out more why this marriage didn't work.
JAMES ELLMAN, PRESIDENT, SEACLIFF CAPITAL:
If it happened at Goldman Sachs, people would be calling for an SEC exam. If this were at a different company, it would be considered the reason that Sokol was leaving, despite him saying he is going to spend more time with family and on philanthropic efforts.
MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & CO IN SAN FRANCISCO:
As far as I know, Sokol was the implicit successor, that was sort of the foregone conclusion by most investors. The initial reaction is going to be disappointment because what the market doesn't like is uncertainty. But in the long run, you still have Buffett there and someone else will eventually come into the picture to fill (Sokol).
WILLIAM LARKIN, FIXED INCOME PORTFOLIO MANAGER AT CABOT MONEY MANAGEMENT IN SALEM, MASS:
Especially in a situation like this, the brand is everything. Often, when you violate that brand for any reason whatsoever, your goose is cooked.
Brand is everything there because the moms and the pops that buy that, the ethical component of that is very very big. They know Buffett's going to be the best steward of their capital.
I have not ever heard of something like that coming from Berkshire.
Some companies say you should be able to enrich yourself and your shareholders, but your shareholders have to come first. But some companies say you cannot invest in something that your clients invest in because the perception will taint our image, and our image is very very valuable.
JERRY BRUNI, CEO AND PORTFOLIO MANAGER, J.V. BRUNI AND CO, COLORADO SPRINGS, COLORADO, $450 MILLION UNDER MANAGEMENT:
Sokol will be missed, but the bench is pretty deep. There have been three to four candidates mentioned as people who can replace Buffett as a CEO, and all of them are very capable.
(Reporting by Dan Wilchins)