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CNBC TRANSCRIPT: David Sokol Defends His Controversial Lubrizol Stock Purchases
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Executive Producer
JOE: I can just tell you that, that seeing, you know, public commentary and some of the stuff in the papers, there is going to be enough of a, ah, of a hoopla, that I wouldn't — Do you think Warren, at this point, will need to tighten up the internal controls at Berkshire, or change something, or take some step to make sure, that at least, it doesn't have the —
SOKOL: You know, not that I see. I don't think there's anything done here. I mean, the fact that the transaction moved forward as quickly as it did is, frankly, unusual. You know, in most cases —
JOE: Right.
SOKOL: You know, I don't know when, when Berkshire first started buying Burlington Northern stock, but it was way before and continued to accumulate, then finally a transaction came about.
BECKY: So the speed of the transaction with Lubrizol surprised you?
SOKOL: Yeah. I mean, normally, you know, 19 out of 20 times when we even have a conversation with someone, it doesn't go any further. And that's fine. I mean, a lot of companies just choose that they want to be independent and that's fine. This one happened to go faster once Warren got involved with it, but, you know, that was outside of my control, so I don't think any internal controls were, ah, were broken or any other, you know, issues are a problem.
BECKY: We, we spoke with Mike Hollander earlier, who was at Solomon Brothers when Warren and Charlie came in, when everything blew up there. And he said that one of the conversations he had with the managing directors at that point was, you've got to make sure, I want everything that you play to be hit squarely within the lines, not to be anywhere near the edges. And, I guess the question is, do you think this rises to that level?
SOKOL: I, I would —
BECKY: If you had to do it over, seeing the hoopla that's broken out, if you had to do it over, would you change your mind on it?
SOKOL: Ah, you know, I guess, knowing today what I know, what I would do differently is I just would never have mentioned it to Warren, and just made my own investment and left it alone. I think that's a disservice to Berkshire, but if that's, if that's what people want to do in the future, that's fine. You can't, or at least I don't think you can, ask executives to not invest their own family's capital in a company that Berkshire had no interest, or even knowledge of, and somehow police that. The only thing you can do is just say if you invest your own money, don't ever mention it to anybody at Berkshire. That doesn't make sense to me either, but, but that's certainly what it sounds like.
JOE: In a, in a perfect world with no second guessing, you'd say, 'I saw a company that was undervalued. I liked it. I bought some for myself.' And I told, ah, Warren Buffet that this is a company that Berkshire should look at. And I, you know, say that and, you know, at face value that seems fine. It's just all the, I can just tell you there's a lot —
SOKOL: Well, I've seen it, I've seen it, you know. Well, the reality is, that is the case. And I, you know —
JOE: Yeah.
SOKOL: — when it's all said and done, the one thing I'm pleased with is the 11 years I had with Berkshire have been fantastic. I've learned a lot. Warren is a phenomenal guy. And by the way, NetJets is great. And I do have to make one comment if you don't mind, just one.
JOE: Uh-huh.
SOKOL: Happy birthday, Lucy.
BECKY: (Laughs.) Who's Lucy?
SOKOL: Have a great day today. I'll see you this weekend.
BECKY: Who's Lucy?
SOKOL: One of my grandkids.
BECKY: Alright.
JOE: Thank you for all your time.
SOKOL: Thank you. Appreciate you just asking whatever questions and getting it out because it's — And I look forward to moving forward.
JOE: OK. We hope to see you again. Good luck in your, it's not really a next life, but in your continuing, in your continuing life.
BECKY: Yeah, the same.
SOKOL: I look forward to it, thanks.
JOE: What are you going, you're not going, are you going to call it Sokol Hathaway, or what's your —
SOKOL: Mini Berkshire.
JOE: Mini Berkshire. (Laughs.) I think there already is a mini Berkshire.
SOKOL: Uh oh. Well, we'll see.
JOE: Thank you.
Current Berkshire stock prices:
Class B: [BRK.B
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Class A: [BRK.A
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