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Monday, June 27, 2011

DAILY MARKETS: Buffett Closes Wesco Deal

June 27, 2011

Last Friday, Berkshire Hathaway Inc. (BRK.A)(BRK.B) chairman and chief executive officer Warren Buffett announced that the company had successfully acquired the remaining 20% of Wesco Financial Corp., a company run and controlled by Berkshire’s vice-chairman Charles T. Munger.

Wesco held a special shareholder meeting on Friday near its Pasadena, California, headquarters to seek approval for the impending acquisition. Much to the company’s delight, the majority of the shareholders (93%) voted in favor of the transaction.

Wesco shareholders’ will be compensated with a combination of cash and Class-B shares (Buffett uses Class-B shares for acquisitions) based on the book value to the acquiring company, which was worked out at $385 per share. Overall, the transaction has cost Berkshire $545.4 million in exchange for 1.4 million shares.

Wesco has been 80.1% owned by Blue Chip Stamps (“Blue Chip”), a wholly-owned subsidiary of Berkshire since 1983. Thus, Wesco and its subsidiaries are controlled by Blue Chip and Berkshire; or put simply, they are under the control of Buffett, who owns 24.3% of Wesco’s stock.

Munger regularly consults with Buffett on Wesco’s investment decisions, major capital allocations, and the selection of chief executives to head each of its operating businesses.

Wesco’s activities can be categorized into three business segments — insurance, furniture rental and industrial. The insurance segment consists of the operations of Wesco-Financial Insurance Co. and Kansas Bankers Surety Co. The furniture rental segment consists of the operations of CORT Business Services Corp, while the industrial segment comprises Precision Steel’s service center and industrial supply operations. Wesco also holds shares in some of the same companies as Berkshire, like Coca-Cola, Kraft, Procter & Gamble, and Wells Fargo. Wesco continues to have a strong consolidated balance sheet, with high liquidity and relatively little debt.

Buffett intends to convert Wesco into a wholly-owned subsidiary of Berkshire, in order to deploy about $28 billion at Berkshire and also to simplify operations at Wesco. Besides, Munger is already 86 and would not be able to act as Wesco’s chairman for long.

Berkshire houses a diverse array of over 80 businesses that are categorized into –Insurance, Regulated Utility, Manufacturing, Service & Retail, and Finance & Financial Products. Some of the companies, which run these businesses, are 100% owned, some are owned up to 80%, and other positions merely involve big blocks of stocks.

Berkshire posted weak first quarter 2011 results with earnings per share of $1.64, marking a 49% year-over-year drop. The deterioration was caused by a decline in operating earnings from its insurance businesses that suffered high catastrophe claims.

The second quarter results are also expected to dent the company’s earnings on the back of a heavy catastrophe season.

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Wednesday, June 22, 2011

SANFRANCISO CHRONICLE: Lubrizol Says Two Executives to Retire as Buffett Takes Control

June 20 (Bloomberg) -- Lubrizol Corp., the lubricants maker being acquired by Warren Buffett's Berkshire Hathaway Inc., said Chief Financial Officer Charles Cooley and Chief Operating Officer Stephen Kirk will retire following the takeover.

Treasurer Brian Valentine will become CFO and maintain his current responsibilities, Wickliffe, Ohio-based Lubrizol said today in a regulatory filing. Cooley, 55, and Kirk, 61, will leave the company "within a few weeks" of the completion of Berkshire's acquisition, Lubrizol said.

Buffett, 80, is counting on Lubrizol Chief Executive Officer James Hambrick, 56, to run the firm after Berkshire completes the deal. Buffett, chairman and CEO of Omaha, Nebraska-based Berkshire, agreed in March to buy Lubrizol for about $9 billion. In April, Hambrick committed to staying with Lubrizol for "several more years."

"James has made a verbal commitment to both Warren, as well as to all Lubrizol employees, that he will remain with the company after the sale," Lubrizol said in an April 18 filing.

--Editors: William Ahearn, Rick Green

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FORBES: Warren Buffett Invests Like A Girl: Book Excerpt


LouAnn Lofton, 06.21.11, 10:30 AM EDT

Academic researchers and behavioral economists have been putting in the long hours and hard work necessary to tease out the differences between how men invest and how women invest. The studies and surveys go back years and cover nearly every aspect of investing--decision making, risk assessment, trading frequency and consistency of results, just to name a few.

Researchers have also studied the differences among professional investors, both male and female, highlighting the fact that these variations in temperament aren't limited just to the universe of the individual investor. And some of the most interesting recent studies have just begun to uncover the role of testosterone in investing, risk taking and trading. You're not shocked to hear it has one, are you?

Brad M. Barber and Terrance Odean of the University of California (Davis and Berkeley campuses, respectively) published what is likely the most famous and groundbreaking study on gender differences in investing with their February 2001 Quarterly Journal of Economics paper, "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment."

By surveying 35,000 discount brokerage accounts over a nearly six-year period, Barber and Odean found several distinct differences both in temperament and performance for men versus women. Their paper was predicated on prior research, which had shown that men tend to be more overconfident than women in so-called "manly" pursuits (of which we can still count finance). Put simply, men think they know more than they do. Women are more willing to admit that they know what they don't know. They're more willing to own up to the fact that they don't know everything.

How does the issue of overconfidence play into investing behavior and results? Well, because of their overconfidence, it was assumed--correctly, as it turned out--that men would trade more than women do. And what does more frequent trading do to your investment results? It drags them down, running up transaction costs and acting like the proverbial albatross on what might otherwise be smart investment decisions.

Barber and Odean found that men traded the stocks in their accounts 45% more than women did. This excessive flip-flopping of securities reduced their net returns by 2.65 percentage points, compared to the 1.72 percentage points women dinged their accounts by trading. Single men were even worse offenders, trading 67% more than single women.

The key here is that women's trading hurt their performance less than men's, thanks to men's greater overconfidence. The difference, then, is more related to temperament than it is to skill. You can be the smartest securities analyst around, but not having the correct mindset can absolutely sink you as an investor. All the know-how in the world can't correct for bad habits. Temperament matters, plain and simple.

What's interesting here, however, is that there was not a performance advantage for women over men thanks to their calm, patient temperaments. Performance between the two groups was about equal. But performance isn't everything. Consistency and "performance persistence" (or the ability to generate steady returns year after year) matter too. You can count on 'em.

The eight traits female investors share with Warren Buffett:

1. Trade less than men do

2. Exhibit less overconfidence: men think they know more than they do, while women are more likely to know what they don't know

3. Shun risk more than male investors do

4. Be less optimistic, and therefore more realistic, than their male counterparts

5. Put in more time and effort researching possible investments, considering every angle and detail, as well as considering alternate points of view

6. Be more immune to peer pressure and tend to make decisions the same way regardless of who's watching

7. Learn from their mistakes

8. Have less testosterone than men do, making them less willing to take extreme risks, which, in turn, could lead to less extreme market cycles

Excerpted from Warren Buffett Invests Like A Girl, And Why You Should Too: 8 Essential Principles Every Investor Needs To Create A Profitable Portfolio by LouAnn Lofton.

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CHINA CAR TIMES: BYD’s Chinese IPO started today, share prices may drop below opening BYD

CCT | June 21, 2011 at 5:19 pm

Investors started on Tuesday to subscribe to new shares of BYD Co. Ltd., the Chinese car maker backed by U.S. billionaire investor Warren Buffett, after the company set its Shenzhen share offering price at 18 yuan (2.8 U.S. dollars) per share a day before.

The company, which already has shares listed in Hong Kong, planned to sell up to 79 million yuan-denominated shares, or A-shares, in an initial public offering (IPO) on the Shenzhen bourse, according to a statement filed with the Shenzhen Stock Exchange (SSE) late Monday.

BYD chairman and founder Wang Chuanfu said the company aims to focus on new energy-related business while enhancing business in traditional cars and electronic products in an interview with the Xinhua-owned newspaper Shanghai Securities News published Tuesday.

“The strategic goal of BYD is to consolidate our global status as a leader of the secondary battery industry, develop into a leader in the sector of IT component manufacturing and assembling, and become a car maker with global competitiveness,” Wang said.

The IPO is being handled by UBS securities. Ding Xiaowen, managing director of UBS Securities investment banking department, identified BYD as a leading provider of all-round new-energy solutions, a leading Chinese car maker, and the world’s most competitive provider of mobile phone components and assembling services.

The value of investing in BYD also lies in its ability of “highly vertical integration and low-cost operation,” and “strong capabilities in technological research and development (R&D) and innovation,” Ding said.

In a statement to the SSE, the automaker, in which Buffett’s Berkshire Hathaway Inc has a 9.9 percent stake, said it planned to use the raised money to invest 400 million yuan in a lithium battery production project, 1.14 billion yuan in establishing a researching and manufacturing center, and 652 million yuan on expanding its auto unit projects.

The company’s planned IPO and new pledge to focus on battery and IT product R&D came at a time when China’s auto sales seem to be slowing after years of boom.

After overtaking the United States to become the world’s biggest auto market in 2010, China’s auto-sales growth has moderated since the start of this year as the government ended its stimulus measures that supported car purchases.

The company’s car sales rose 16 percent to 519,806 vehicles in 2010, decent growth in light of the global average but less than half of the average growth of 32.4 percent in China’s total auto industry.

In spite of a 17.8 percent increase in business revenues in 2010 compared with 2009, the Shenzhen-based company’s 2010 net profit fell by 33.5 percent from a year earlier to 2.52 billion yuan, due to fierce competition and a reduction in government incentives for auto purchases.

The company saw a decline in the profit rate of its traditionally competitive secondary battery business, which fell from 26.12 percent in 2009 to 19.77 percent in 2011.

Wu Jingsheng, BYD’s vice chairman, attributed the lower profit rate to an adjustment of the product structure in which sales of product with lower profits outperformed products with higher profits, and the rising material cost as well as a price drop in the secondary batteries.

CriEnglish later reports that share prices are likely to sell for less than their opening price by the end of the day:

Shares of BYD Co. Ltd., the Chinese automaker backed by U.S. billionaire investor Warren Buffett, which will begin taking subscriptions for its initial public offering Tuesday, are likely to fall below their IPO price in Shenzhen like many other recently listed companies, according to the executive business editor of “China Daily.”

BYD, which is already listed in Hong Kong, will raise a less-than-expected 1.42 billion yuan ($219 million) during its IPO on Shenzhen Stock Exchange, although it initially intended to raise 2.19 billion yuan. The company plans to sell its IPO shares at 18 yuan each down from the original price of 27 yuan, based on a statement it filed with the stock exchange.

Mark Hughes, Executive Business Editor of “China Daily,” said BYD’s move to lower its original IPO price was a good move, because the Shanghai and Shenzhen exchanges have tumbled about 15 percent since April high.

He added this was an indication that growth was slowing, with Italian fashion label Prada and luggage maker Samsonite raising capital that was much lower than anticipated in their respective IPOs in Hong Kong last week.

Despite such circumstances, BYD could not postpone its IPO to a later date, because it was legally committed to see it through, Hughes said.

Stella Lee, BYD’s Senior Vice President, said she would rather have waited until next year, but she was bound by the rules that govern IPOs.

Meanwhile, Hughes said he believed that shares of BYD were likely to fall below their IPO price as had happened with many other recently listed companies in China.

“Share prices in Hong Kong have fallen nearly 50 percent in about the last 10 months, and they’ve got rivals like General Motors and Nissan who are introducing cheaper models,” Hughes said. “And also China’s passenger car sales are past their boom. They had a brilliant time in the past two years, but in May the government ended tax incentives and subsidies, so that’s hit sales as well as there being a sort of saturation almost at the moment.”

Hughes also said the driving force for BYD to continue to attract investors depended on the price and quality of the new vehicles the company introduced.

“They are introducing a new series of electric vehicles in the next two years,” Hughes said. “Some of this IPO money will go towards the research and development of these vehicles, but a lot of analysts are saying that BYD attracts first-time car owners, and they’ve been undercut by their rivals, and they ought to be investing in technology to attract second-time car buyers rather than first-time (car buyers).”

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Saturday, June 18, 2011

THE STREET: Buffett's NetJets Overcomes Turbulence

By Don Dion 06/17/11 - 06:00 AM EDT

NEW YORK (TheStreet) -- This weekend, I will get the opportunity to rub elbows with the one and only Warren Buffett when I head to Las Vegas to attend a NetJets-sponsored poker tournament.

So far, 2011 has proven to be an interesting and controversial year for Berkshire Hathaway's(BRK.A_) fractional jet ownership company, and there is a good chance that the Oracle of Omaha will use the event as a chance to ease tensions and restore customer confidence in the firm.

Since Berkshire Hathaway initially acquired NetJets in 1998, the company has been a tricky investment. As Buffett noted in his 2010 Berkshire Hathaway letter to shareholders, "(e)ven though NetJets was consistently a runaway winner with customers, our financial results, since its acquisition in 1998, were a failure.

"Despite its troublesome past, over the past year, the company's prospects have begun to shift in a new direction. Following a dramatic restructuring, which included replacing the company's former CEO, Richard Santulli with David Sokol, the firm managed to end 2010 on a strong note. By the close of year, the company boasted $207 million pre tax.

Heading into the start of 2011, it appeared as though NetJets had finally found its footing and was on track to become another financially successful component of Berkshire Hathaway's expansive portfolio. However, the company's triumphs were quickly overshadowed when David Sokol unexpectedly announced his resignation from Berkshire Hathaway.

Almost immediately, controversy began to swirl around Sokol when it was learned that the executive had made some questionable trades leading up to Berkshire Hathaway's Lubrizol(LZ_) acquisition. Following an official investigation, a Berkshire committee found that Sokol's actions were in violation of the company's code of ethics.

The negative media storm surrounding Sokol's trades and resignational has likely reflected poorly on NetJets. However, in the aftermath the firm has taken steps to ensure that it will effectively move beyond this dark period and prepare for strength down the road. This has included placing Jordan Hansell, NetJets' president, in the vacated CEO spot.

Although it has faced staggering trials, looking ahead, the outlook for NetJets and the corporate jet industry as a whole appears promising. As CNBC noted late last week, private jet use has been on the rise amidst improving economic conditions: During the first quarter of 2011, flight hours increased by 11%.

NetJets, meanwhile, has continued to expand. At the start of March, it was announced that the firm had placed a multi-billion dollar order with airplane maker Bombardier to purchase up to 120 new crafts. More recently, firm signed a lease with Signature Flight Support that will provide NetJets with access to a private terminal at Palm Beach International Airport.

Berkshire Hathaway has had a storied history with NetJets. Now, with new names at the helm, and the company showing signs of financial strength, it appears as though a new chapter is being written. Fans of both Warren Buffett and the airline industry will want to keep a close watch on this unique corner of the Berkshire Hathaway Empire to see how it fares in the months ahead.

Written by Don Dion in Williamstown, Mass.

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Tuesday, June 7, 2011

NOLA.COM: Warren Buffett encourages graduates of small business program

Published: Monday, June 06, 2011, 6:36 PM Updated: Monday, June 06, 2011, 6:51 PM

Buoyed by words of encouragement from billionaire investor Warren Buffett, 30 small business owners from New Orleans completed their studies Monday in a program that offers training in management, marketing and accounting designed by Wall Street executives.

warrenbuffett.jpgWarren Buffett embraces Kendall Washington, the valedictorian of Monday's graduating class.

Buffett, a key adviser to the nationwide "10,000 Small Businesses" initiative, hailed the first local graduates, who he said run the enterprises that "are the backbone of towns and cities across America.''

During a brief address inside a Delgado Community College auditorium, Buffett told stories of how he paid tens of millions of dollars for companies created by risk-takers who had borrowed only thousands decades before.

While he made no purchase offers Monday, Buffett predicted success for the entrepreneurs seated on the stage behind him.

"I expect the 30 people who are already doing things well - with the benefit they get from some funding, some instruction, some mentorship - to do even better in the future,'' Buffett said of the participants who got to shake his hand as they received their diplomas.

"We've got 30 winners to start with, and all we're doing is giving them a few more ingredients to help them succeed even more. Very impressive. They are really impressive,'' he said in an interview after the ceremony.

Asked what advice he had for the graduates, Buffett emphasized the importance of customer satisfaction.

"If you delight your customers, it works,'' he said. I've never seen a business fail that's delighted its customers. And that's a matter of people loving the business they're in and projecting that love through to the customer.''

The investment banking firm Goldman Sachs sponsored the program that provided 100 hours of instruction on the Delgado campus.

The firm also has pledged $20 million in loans to New Orleans area small businesses as part of a nationwide effort to distribute $500 million to companies struggling because of the recession and housing crisis.

The program targets small firms operating in "economically underserved areas" that are having difficulty gaining access to capital through traditional means and those that need non-monetary assistance, such as business management classes, to grow.

The program included one-on-one mentoring, accounting workshops and pro bono legal advice from Goldman Sachs professionals.

Local graduates represent a wide range of industries, including construction, pest control, retail stores, medical services, event planning, equipment rental, courier services and valet parking businesses and more.

The 30 New Orleans participants join more than 250 other small business owners who have participated in programs in New York, Los Angeles, Long Beach and Houston.

The next class in New Orleans will begin in the fall.

Mayor Mitch Landrieu, who accompanied Buffett to the event, said more than half of the graduates have increased sales or hired employees since the program began in March.

"The future of New Orleans and the heart of our economy are being built by small business owners who live, work and raise families here," said Landrieu, who called the program "the new model for job creation.''

During a news conference, Landrieu said decisions by Buffett and Goldman Sachs to invest here are a good sign for the recovering city.

"When Warren Buffett says to people "I'm investing in New Orleans,' I just would suggest to you that if you would have invested with him in 1950 with $10,000, you would have $650 million in your pocket right now.

"So, I'm betting on him and he's betting on us. And I feel pretty good about it.''

On the prospects of attracting large retailers to the city, Landrieu acknowledged that post-katrina New Orleans remains a tough sell.

"We have a real challenge here, because whether it's financial services or whether it's retail, you have some of the folks who make decisions in this country operating off of outdated and bad information,'' he said.

Landrieu said one of the reasons he has commisioned a video depicting the city's progress is to illustrate how far the city has come since the storm.

He said he believes many investors "must be looking at us through the lens of pre-Katrina'' and relying on five-year-old data.

"We have to get out there and prove it to them and show it to them,'' he said. "But we're dealing with a skeptical national public.''

Offering his take on the economic development challenges facing New Orleans, Buffett said downtown retail in most American cities has problems.

"I mean, when the shopping center came along, when people had the ample parking and all that instead of going to shop on streetcars, it changed the profiling of retail all over the country,'' he said.

"We owned a department store in Baltimore. There were four big stores there on a corner . . . none of them are there anymore. So, the world does change. You have to go where your customers want you to be. The customer dictates everything.''

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CNBC: Warren Buffett Lunch Bids Quickly Approaching Last Year's Record $2.6 Million

Published: Monday, 6 Jun 2011 | 8:34 PM ET
By: Alex Crippen
Executive Producer

Lunch with Warren
After less than 24 hours, bids for lunch with Warren Buffett are already approaching the record $2.6 million paid last year by an anonymous winner.

As of 8:30p ET Monday evening, two competing bidders had driven the price up to $2,345,678.

Those sequential digits are a bit suspicious, but bidders are required to pre-qualify in an effort to keep things serious.

The company administering the auction warns that "shill bidding is neither allowed nor tolerated" and warns the "practice is illegal and carries legal consequences in many areas."

Proceeds of the charity auction will go to San Francisco's Glide Foundation.

The auction started Sunday evening at 10:30p ET and is scheduled to end this coming Friday evening at 10:30p ET.

Current Berkshire stock prices:

Class B: [BRK.B 75.34 -0.91 (-1.19%) ]

Class A: [BRK.A 113052.00 -1328.00 (-1.16%) ]

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Monday, June 6, 2011

FORBES: Annual Warren Buffett lunch auction starts

By JOSH FUNK , 06.05.11, 03:27 PM EDT

OMAHA, Neb. --

Paying more than $1 million for lunch may seem excessive, but when the price includes a private audience with revered investor Warren Buffett some people think it's worth it.

The annual online auction for lunch with Berkshire Hathaway's billionaire chairman and CEO started Sunday and runs through Friday evening. Past winners of the auction say the money they paid was a good investment, and they're glad it benefited the Glide Foundation, which provides social services to the poor and homeless in San Francisco.

Buffett said he always tries to make the several-hour lunch worthwhile, and he's never had a complaint.

"You want a person that bids the most to know they're getting something exclusive," said Buffett, who only offers one such lunch a year.

Perhaps the interest in a private audience with Buffett shouldn't come as a surprise since roughly 36,000 people attended Berkshire's annual meeting last month to hear him talk. Buffett is one of the world's richest men and biggest philanthropists, and he's regarded as one of the best investors ever.

Investor Mohnish Pabrai said the $650,100 he and another investor paid to win the auction in 2007 seems like a wonderful value, especially since the average price paid in the three years since then has topped $2 million.

"It was the bargain of the century," said Pabrai, who manages Pabrai Investment Funds in Irvine, Calif.

Last year's auction set a new record for the most expensive charity item eBay ever sold when an anonymous American paid $2.6 million to spend time with Buffett.

In 2009, Canadian investment firm Salida Capital paid $1.68 million to dine with Buffett. And that price represented a discount over the record $2.11 million a Chinese investment fund manager paid in 2008.

Buffett said he lets the auction winner determine the topics of conversation at the lunch, which is usually held at New York's Smith and Wollensky steak house. He said several of the winners have wanted to talk about their families.

"I don't set the agenda at all at that price, and incidentally, I don't leave a 15 percent tip either," Buffett said.

Pabrai said he doesn't think he spent hardly any time talking about investing with Buffett at the lunch. He said he was grateful to spend several hours with a unique individual like Buffett and thinks people make too much of the lunch price, which is a charitable donation.

Salida Capital CEO Courtenay Wolfe said she believes the lunch was an incredible and inspirational experience, and she and her partners were glad to make a sizeable personal donation to Glide.

"We did it for the opportunity to meet Warren Buffett and as a way to thank our top clients and for philanthropy," she said.

Buffett has supported Glide ever since his late first wife, Susan, introduced him to Glide's founder, the Rev. Cecil Williams. And the lunch auction has become an important source of money for Glide, which runs on a roughly $17 million annual budget.

Glide provides meals, health care, job training, rehabilitation and housing support to the poor and homeless, and Buffett has praised Glide's efficient and effective approach.

"We are deeply grateful that Mr. Buffett shares our unwavering commitment to help our neediest neighbors - regardless of background or circumstance," Williams said.

Buffett is gradually giving away the bulk of his fortune over time. The plan he launched in 2006 will eventually split most of his shares of Berkshire stock between five charitable foundations, with the largest chunk going to the Bill & Melinda Gates Foundation.

The company Buffett leads owns roughly 80 subsidiaries including insurance, furniture, clothing, jewelry and candy companies, restaurants and natural gas and corporate jet firms, and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

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BLOOMBERG: Berkshire Failed to Apply Sokol Rule at RV Unit, Ex-Manager Says


Warren Buffett’s Berkshire Hathaway Inc., which investigated former executive David Sokol and said he violated insider-trading rules, failed to enforce its code of ethics when told of abuses at its recreational-vehicle unit, according to an ex-manager who is suing the company.

The board didn’t give such a review to accusations of fraud against Peter Liegl, head of the Forest River subsidiary, said Berkshire Chief Financial Officer Marc Hamburg in a sworn statement included in a court filing this week. Hamburg was deposed by lawyers for Brad Mart, who said he was unfairly fired in his suit against Berkshire, Forest River and Liegl.

“Brad Mart followed the Code and relied upon it,” Mart’s lawyers said in a May 31 filing in federal court in South Bend, Indiana. “Defendants simply ignored it.” Liegl, through a lawyer, denied wrongdoing.

Mart contrasted Berkshire’s handling of his complaints with the company’s probe and 18-page audit report on Sokol in April. Mart has claimed that Buffett and Omaha, Nebraska-based Berkshire didn’t protect him from retaliation after he confronted Liegl with his accusations. Mart said that he had brought his grievances directly to Buffett, Berkshire’s chief executive officer, and asked for direction.

“They discussed how to proceed, including the possibility of resolving the matter by reporting it to Rebecca Amick,” Berkshire’s director of internal auditing, Mart’s lawyers wrote. “But Buffett made it clear to Mart that Mart should instead discuss the matter directly with Liegl.”

‘Allegations Are Unfounded’

Liegl’s lawyer, Jeanine Gozdecki, a partner at Barnes & Thornburg LLP, said, “We believe that Mr. Mart’s allegations are unfounded.” Gozdecki also represents Forest River.

Liegl required Forest River to buy parts, at inflated prices, from a company he owned and appropriated cash from factory vending machines, Mart said in his complaint in April 2010. Liegl also reneged on a promise to make Mart CEO of Forest River and threatened his life, according to the complaint. Mart had been named general manager of the company’s financing business and was fired in 2009, according to the complaint.

Buffett, who oversees the CEOs of more than 70 operating companies, has faced questions about Berkshire’s personnel since Sokol’s departure. Sokol, who led energy and luxury-flight units, violated Berkshire’s code by buying Lubrizol Corp. stock this year while pushing Buffett to acquire the company, the audit committee said. Buffett has said he knew that Sokol owned shares and failed to press for details about his holdings. Sokol didn’t violate Berkshire rules, his lawyer has said.

‘A Loud Message’

“The company takes its policies very seriously,” Berkshire’s audit committee said April 27. “We expect this report to send a loud message that those policies are designed to be read broadly.”

Berkshire’s April 30 annual meeting was dubbed “The Great Inquisition” by New York Times writer Andrew Ross Sorkin in a column earlier that month. At the meeting, Buffett told shareholders he made a “big mistake” in not asking Sokol for more information about the Lubrizol stockholding. Sorkin was one of three journalists who selected shareholder questions for Buffett at the meeting.

Mart’s dismissal wasn’t related to his complaints, and Mart didn’t alert Buffett to any unethical or illegal activities, Berkshire Secretary Forrest Krutter said last year. Krutter said he was instructed by Buffett to investigate “business items” at the RV maker and subsequently looked into the fraud complaints. Krutter said he found no “fraudulent, unethical or illegal activities.”

Krutter and Cary Lerman, a Munger Tolles & Olson lawyer who is representing Berkshire, didn’t return calls seeking comment today. Buffett didn’t return a message left with an assistant.

Berkshire, which has said that Mart and Buffett spoke by phone on three occasions, has sought dismissal of the lawsuit for lack of jurisdiction. Berkshire, the parent company, doesn’t do business in Indiana and shouldn’t be subject to courts in that state, it said in the 2010 request for dismissal. Mart has said Berkshire’s control over Elkhart, Indiana-based Forest River submits the firm to the state’s law.

The case is Mart v. Berkshire Hathaway Inc. (BRK/A), 3:10-cv-00118, U.S. District Court, Northern District of Indiana (South Bend).

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Wednesday, June 1, 2011

CNBC: Buffett Charity Lunch Goes for Record $2.6 Million

Published: Saturday, 11 Jun 2011 | 9:22 AM ET
By: Alex Crippen
Executive Producer

Lunch with Warren
An anonymous bidder topped his or her own winning offer to set a new record in this year's Warren Buffett charity lunch auction.

The high bid at the scheduled end of the auction was $2,345,678. While notable for its consecutive digits, it fell below the $2.6 million paid last year by another anonymous winner.

We're told, however, that "the winning bidder wished to top last year’s record-breaking bid and pledged the additional amount" needed to bring the price for this year's lunch up to $2,626,411.

All of the money again goes to Glide, a San Francisco anti-poverty organization.

Current Berkshire stock prices:

Class B: [BRK.B 75.5101 0.5001 (+0.67%) ]

Class A: [BRK.A 113451.00 451.00 (+0.4%) ]

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