This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kass: Buy Berkshire

This blog post originally appeared on RealMoney Silver on March 31 at 7:15 a.m. EDT.

While the David Sokol situation at Berkshire Hathaway (BRK.A - Get Report)/ (BRK.B - Get Report) is not quite "a tempest in a teapot," the large after-hours drop to $83 a share more than discounts the economic consequence to the company, which is likely to be minor.

Let me make it clear that the timing of Sokol's purchase of Lubrizol (LZ) stock is disturbing, as the calendar of facts surrounding the situation may be inconsistent with the law. Moreover, it certainly is inconsistent with the ethics and investment principles for which Warren Buffett has stood over the decades.

I am in general agreement with Whitney Tilson's comments, expressed last night on "Fast Money," that Sokol is a loss to Berkshire but there are several equally qualified replacements for the Oracle. Moreover, I have long thought that Sokol's frequent requests to retire from the company suggested it was unlikely that he was going to replace Buffett.

That said, Mr. Buffett is not going anywhere for now.

Last night, I purchased Berkshire B shares at around $83, down $2.50 from the NYSE close after the news hit, as Berkshire's current share price relative to intrinsic value has widened and now represents an attractive entry point.

My purchase was emboldened by the report on "Fast Money" that Sokol would be appearing on "Squawk Box" this morning, as a more thorough explanation of his stock purchases could ameliorate some short-term concerns and lift the cloud currently hanging over Berkshire's shares.

Finally, if I were a commentator on "Squawk," I would have asked the following questions of Sokol this morning:
  • What are Berkshire's internal corporate guidelines for buying and selling stock? Does employee investment activity have to be reported? If so, when? Who within Berkshire signs off on purchases/sales? And does Buffett see the stock activity of employees and Board members?
  • Why did he buy and quickly sell his original stake in Lubrizol?
  • Why did he repurchase a much more sizeable position in Lubrizol approximately a month later?
  • With regards to the second purchase, how did the size of his purchase compare to his average portfolio holding?
  • What motivated his decision to repurchase a much large stake in Lubrizol the second time in January? Explain the timing of both purchases.
  • Is he an active or inactive investor?
  • It has been reported that he intended to resign from Berkshire over the last two years. What was his present status with regard to staying/leaving?
  • Was he currently aware of who Buffett would propose as his replacement? Was he in contention?

Doug Kass writes daily for RealMoney Silver , a premium bundle service from For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.
At the time of publication, Kass and/or his funds were long BRK.B, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BRK.A $219,000.00 0.00%
BRK.B $145.48 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs