Buffett Watch

Buffett Says Don't Draw Conclusions From Sales: "I Never Inherit My Investment Decision"

Warren Buffett and Becky Quick check their notes during a Squawk Box commercial break
CNBC/Dave Grogan

Warren Buffett says investors would be wrong to think Berkshire Hathaway's elimination of eight stocks from its portfolio means he's negative on the companies that were sold.

Last month, Berkshire's portfolio filing with the SEC showed that eight positions were liquidated in last year's fourth quarter, including Bank of America and Nike .

At the time, we guessed that Berkshire was cleaning out the positions that had been created by Lou Simpson, who retired at the end of 2010

On today's live Squawk Box appearance, Buffett confirmed that he and Simpson had jointly decided to liquidate the GEICO stockpicker's portfolio.

"I never inherit my investment decision from somebody else.  If Charlie Munger made me a gift of 100 shares of some stock, I would sell it then — and then —I would then decide whether I wanted to buy it again myself.  But I do not believe in default-type decisions on investments.  So When Lou left, his portfolio left.  When a new man comes in, his portfolio comes in."

That new man is Todd Combs.  Buffett says Combs "is going to be responsible for his decisions — just as Lou was when he was (at Berkshire subsidiary GEICO.)  And I want it to be Todd's portfolio."

Later, he was asked specifically about the Bank of America sale:

JOE KERNEN: Berkshire was in Bank of America, and it wasn't a good experience, and you're out now. I think you lost two-thirds or something. But, I mean, obviously the financial crisis hit. But that--that's making some--you're voting with your feet there, I think, what, on management, on the prospects for B of A? I mean, you like Well--you're staying in another bank, why would you get out with a loss instead of the...


JOE: Go ahead.

BUFFETT: I never--Joe, I never bought a share of Bank of America. That was one of the 15 or so positions of Lou Simpson. So he did not make a decision to sell Bank of America in the second half of last year.


BUFFETT: He just--he was liquidating his entire portfolio. He sold a--he sold Nike. He hated to sell Nike. He loved Nike. But he was cleaning out his portfolio, and Todd's bringing in a new one. But I...


BUFFETT: Bank of America was never part of a portfolio I managed.

JOE: OK. So when you see Berkshire liquidates its entire stake in Bank of America, you can't say, oh my God, they don't like the prospects--or Warren doesn't like the prospects for Merrill Lynch...


JOE: ...or (CEO Brian) Moynihan...


JOE: ...or you can't draw any conclusions from that.



BUFFETT: Zero, zero. I never bought a share and I never sold a share personally.

KERNEN: All right. OK.

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