The high-ranking Berkshire Hathaway executive who suddenly resigned this week says he wants to start his own investment firm patterned after Warren E. Buffett's company.
David L. Sokol appeared Thursday on CNBC, a day after Buffett announced that Sokol had resigned. Many investors believed that Sokol had been the leading candidate to eventually succeed Buffett as Berkshire Hathaway's CEO.
Sokol also defended personal trades he made in Lubrizol stock before Berkshire announced its $9 billion deal to buy the specialty chemical company.
"I don't believe I did anything wrong," Sokol said. "I was making an investment I believed in."
Sokol said that he has been thinking of resigning for more than two years and that the time was right now because the Berkshire subsidiaries he oversaw are all in good shape. He has been chairman of Berkshire's MidAmerican Energy, NetJets and Johns Manville units.
He told CNBC that he wants to set up a "mini Berkshire Hathaway" similar to the investment partnership Buffett set up in 1965.
Sokol, 54, says he likes to build companies and never aspired to be Berkshire's CEO or even had a conversation with Buffett or any board member about the job.
"Nobody's going to do it as well as Warren does. And there's going to be a lot of change that comes with that," Sokol said. "The reality is Warren's not going anywhere. He's in great shape."
Sokol also answered questions about Lubrizol stock trades he made before Berkshire announced its deal for the specialty chemical company.
Buffett, 80, said he learned March 19 that Sokol bought 2,300 shares of Lubrizol in December one day after he asked an investment banker to contact the specialty chemical manufacturer about a possible deal. Sokol sold those initial shares a week later but then bought nearly 100,000 Lubrizol shares in early January about a week before recommending that Berkshire make a bid.
The Berkshire chairman said that the decision, announced March 14, to offer $135 in cash for each share of Lubrizol was entirely his but that the deal wouldn't have happened without Sokol's early efforts.
Sokol said Thursday that the details of his Lubrizol trades were disclosed in Buffett's statement Wednesday as part of an effort to be transparent with investors because his ownership would have been revealed when the deal was voted on.
He said that at the time he invested in Lubrizol, he didn't have any idea that Berkshire would actually buy it. Sokol said Buffett has rejected several previous investment ideas he presented.
"I made the decision to buy the shares because I thought it was a good investment for my family and would do it again tomorrow," Sokol said. He stands to make roughly $3 million on the Lubrizol stock if Berkshire's acquisition goes through.
Buffett said he doesn't believe that those stock purchases were illegal or that they were a factor in Sokol's decision to leave.
Glenn H. Tongue, a managing partner at the T2Partners investment firm, said it appears that Buffett was uncomfortable with Sokol's Lubrizol trades, so he wanted to disclose it.
"There's a gap between unlawful and uncomfortable, and this certainly made it to the level of uncomfortable," Tongue said.
But Tongue said he doesn't believe that Sokol's departure affects the value of Berkshire, so if the stock falls significantly on the news, T2 Partners will likely buy more Berkshire stock.
Berkshire Hathaway's Class A shares fell Thursday by $2,803, or 2.2 percent, to $125,300.
Buffett said in a statement Wednesday that Sokol had tried twice before to resign, most recently about two years ago but that Buffett and other board members persuaded him to stay with the company. He accepted Sokol's resignation this time.
The Berkshire chairman declined to comment beyond his statement. He has repeatedly praised Sokol's work for Berkshire over the years, and he reiterated that praise in the statement.
Eventually, Berkshire plans to split Buffett's job into three parts -- CEO, chairman and several investment managers. Buffett remains in good health and has no plans to retire, but he says Berkshire's board regularly discusses succession and knows whom it would pick as CEO if a need arises.
Besides Sokol, the other Berkshire managers who are believed to be possible successors are Ajit Jain, who runs Berkshire's reinsurance division; Greg Abel, president and CEO of MidAmerican; Tony Nicely, chief executive of GEICO; and Burlington Northern Santa Fe CEO Matt Rose.
Due to Sokol's departure, Buffett said Abel will become MidAmerican's chairman; Todd Raba, president and CEO of Johns Manville, will become its chairman; and Jordan Hansell, president of NetJets, will become that unit's chairman and CEO.
Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms, but its insurance and utility businesses typically account for more than half of the company's net income. Berkshire also owns The Buffalo News, and Buffett is the newspaper's chairman. It also has major investments in companies such as Coca-Cola and Wells Fargo.
Only 21 of Berkshire's more than 260,000 employees worldwide are based at its headquarters in Omaha.