Renowned financier Warren Buffett, the iconic figure behind Berkshire Hathaway, has been reported to engage in substantial stock transactions mirroring those of his conglomerate.
This revelation, brought forth by ProPublica through an examination of leaked IRS data, raises potential concerns regarding the violation of Berkshire Hathaway's ethical guidelines.
Buffett, who has been instrumental in crafting these ethical standards, may have crossed a line by dealing in stocks that align with Berkshire's trades. Historically, Buffett's personal investment choices have remained under wraps, contrasting the public interest in Berkshire's portfolio shifts. However, the recent disclosure indicates that over the last two decades, Buffett's personal trades have occasionally coincided with those of Berkshire, either in the same quarter or the preceding one.
Despite being unavailable for direct comments, these findings put Buffett in a delicate position, given his previous assertions about the conflict of interest inherent in parallel trading with Berkshire. Notably, Berkshire's own ethical code mandates the disclosure of all securities transactions prior to any personal trading by company personnel, emphasizing transparency.
ProPublica's report details that Buffett's private stock sales between 2000 and 2019 amounted to at least $466 million. However, the records do not encompass securities purchased and held. Notable transactions include:
• On April 24, 2009, Buffett sold $20 million in Wells Fargo shares from his personal account. While the exact Berkshire transaction is not specified, the company was a significant shareholder at the time.
• In August 2009, Buffett offloaded $25 million in Walmart stock personally. This move coincided with Berkshire approximately doubling its stake in the retailer during the same quarter, though the sequence of events remains unclear.
• October 2012 saw Buffett selling $35 million worth of Johnson & Johnson shares, mirroring Berkshire's sale. The exact timing was not disclosed in the quarterly filing, and Berkshire further reduced its holdings in the subsequent quarters.
This situation, if validated, presents a complex ethical dilemma, considering Buffett's stature and the principles he advocates. For wealth advisors and RIAs, this serves as a poignant reminder of the intricate relationship between personal and professional investment decisions and the paramount importance of adhering to ethical standards in financial dealings.
