In a groundbreaking investigation by ProPublica, a new light has been shed on Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, revealing a series of private stock trades that seem to contradict his public persona and stated investment principles. This revelation, coming from one of the most respected names in investigative journalism, ProPublica, uncovers a side of Buffett that the public rarely sees.
Buffett, often referred to as the “Oracle of Omaha,” is known for his investment acumen and ethical stance in the financial world. However, ProPublica’s investigation, based on leaked IRS data, suggests that Buffett’s private trading activities might not always align with the ethical standards he publicly endorses.
The Fortune Interview and Its Aftermath The story begins with a 2009 interview in Fortune, where Buffett praised Wells Fargo, leading to a significant surge in the bank’s stock. Berkshire Hathaway, under Buffett’s leadership, was already a major shareholder in Wells Fargo. Interestingly, following the interview and the subsequent rise in Wells Fargo’s stock price, Buffett privately sold $20 million worth of the bank’s shares from his personal account.
Buffett’s Personal Portfolio: A Closely Guarded Secret Buffett has always maintained a personal stock portfolio, distinct from Berkshire Hathaway’s holdings. The contents of this portfolio have been a closely guarded secret, even from his biographer, Alice Schroeder. Buffett has repeatedly stated that he avoids trading stocks that Berkshire is dealing in, to prevent any conflict of interest. However, ProPublica’s findings suggest otherwise.
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A Pattern of Contradictory Trades ProPublica’s investigation reveals that on at least three occasions, Buffett engaged in trading stocks in his personal account either in the same quarter or the quarter before Berkshire traded shares of the same companies. These actions potentially conflict with Berkshire’s own ethics policies, which Buffett authored, requiring public disclosure of securities transactions before personal trading by Berkshire employees.
The Scale of Buffett’s Personal Trading Between 2000 and 2019, Buffett’s records show at least $466 million in personal stock sales. While this amount is modest compared to his overall net worth, it offers a rare glimpse into how Buffett manages his personal investments. Notably, these records do not include stocks that he bought and held, suggesting that his portfolio might be larger than what is visible.
Buffett’s Public Persona vs. Private Actions Buffett’s public image is that of a principled investor with a strong ethical compass. He has often spoken out against trading reputation for profit and has been a vocal advocate for charitable giving and higher tax rates for the wealthy. However, ProPublica’s findings raise questions about the consistency between his public statements and private investment actions.
Specific Instances of Interest
- Wells Fargo Trade: Following a 2009 Fortune interview where Buffett praised Wells Fargo, he sold $20 million worth of the bank’s shares from his personal account, coinciding with a rise in the bank’s stock price.
- Johnson & Johnson Trade: In October 2012, Buffett sold $35 million worth of Johnson & Johnson shares from his personal account, around the same time Berkshire revealed it had sold shares of the same company.
- Walmart Stock Sale: In August 2009, Buffett sold $25 million of Walmart stock from his personal account, while Berkshire was increasing its stake in the company.
These trades, particularly if made with knowledge of Berkshire’s impending actions, could be seen as conflicting with Buffett’s own policies on insider trading and ethical investment practices. They also raise questions about the transparency and integrity of one of the world’s most admired investors.
