For Buffett, it's good to be a saint

David Sokol, heir apparent at Berkshire Hathaway, resigns after buying stock in a Berkshire acquisition target. If it were any company but Warren Buffett's, an investigation would follow.

By Jim Cramer Mar 31, 2011 8:41AM

jim cramerCall me confused. Confused about how Berkshire Hathaway (BRK.A) works. Confused about what it might be like to work there. I had this vision -- I am sure you did, too -- of portfolio managers in monk outfits, hairsuits even, working quietly for the master, putting in the time with the icon, learning, learning, learning. An abbey of apprentice-saints waiting for anointment.

 

Now I am thinking: What the heck? They are trading ahead of deals, trading for their personal accounts, darting in and out of potential targets when it is known that the saint is about to pounce and talks about it to everyone in the world?

 

Consider, after all, that if this is the behavior of the heir apparent David Sokol, who the heck knows what's going on there? What are the little, less-scrutinized and less-hyped individuals doing? Anything they want, on an honor system? Cool!

 

Most shops have really strict rules to prevent these kinds of things. At my firm I said everything that was learned at the company -- every insight, every gleam of an idea -- was owned by the partners. We owed our firm to them, and they paid us handsomely so we could have NO PERSONAL ACCOUNTS. I said it was, per se, wrong.

Maybe some people think that's extreme. I liked it for its no-exceptions simplicity. Others allow personal accounts but with very strict trading provisions.

 

But I don't know a company that is so loosey-goosey, as Berkshire looks like it was, to allow an employee -- sorry, the saints-in-waiting are employees, after all -- to buy or sell without notice, let alone to buy ahead of time when a deal could be in the works.

 

Of course, it's worse than the letter. Sokol buys stock, tells the saint, blows out the stock, then sells it back. Bigger than before. Much bigger.

 

That doesn't concern me. I care about the process. I care about how a company works. I care about what the regimen is. Right now I am thinking that there wasn't one.

For anyone else, there would be a real investigation, as this is, alas, an investment firm.

 

For this, here's how it plays out: "Warren Buffett brought it to our attention. He's assured us that it won't happen again. Case not closed. Case never opened."

 

It's good to be a saint.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Learn how to follow Cramer's trades for his Charitable Trust.

 

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2Comments
Mar 31, 2011 10:22AM
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Yea right, Buffet and Gates both got to be billionaires without being greedy and scheming to take advantage of others.  You can't win the race without beating the competition and all's fair in business, romance, sports and war. Go watch the Disney channel if you want to feel good. 
Mar 31, 2011 10:38AM
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I applaud Cramer for his take on Buffet. I am usually a critic of Cramer and CNBC as shills for Wallstreet. Buffet is beginning to show his true colors as a brilliant wallstreet insider who plays the same games as the other crooks play. I hope Cramer continues to seperate himself from the shills and lapdogs who have rigged the game for us small investors. Support our troops and buy American.

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