John Freund is not just Warren Buffett's broker of 30 years.
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He's also the man that inadvertently led Buffett to discover that his longtime lieutenant and potential successor, had deliberately deceived him over a Lubrizol trade that earned him $3 million.
We learned from the damning report released by Berkshire's audit committee that Buffett had realized something wasn't quite right about David Sokol's Lubrizol holdings after a Citi banker mentioned Citi's role in bringing the chemical company to Sokol's attention.
According to the Berkshire report, Sokol was deliberately vague on how he came to own Lubrizol stock; when he discussed the company with Buffett, he never articulated that he had only bought the shares after meeting with Citi bankers it alleges.
But official Citibank and Lubrizolaccounts of the merger discussions show that Sokol had only purchased shares in the chemical company after a series of discussions, in which it was quite clear that Lubrizol was a Berkshire target.
As a reminder: On March 14 this year, Berkshire and Lubrizol announced they were joining hands.
A Citi banker with whom Berkshire had worked -- John Freund -- naturally congratulated Buffett on the deal.
In their chat, Freund mentioned to Buffett that it was Citi that "had brought Lubrizol to Mr. Sokol’s attention."
That "was the first time" Buffett was made aware that "investment bankers played any role in introducing Lubrizol to Mr. Sokol," and the Berkshire chief realizedthat that story "did not square with Mr. Sokol’s remark in January that he had come to know Lubrizol by owning the stock." So he acted.
So who is John Freund?
For someone that's Warren Buffett's broker, he's got a pretty low online presence -- spare video interviews on being: Buffett's broker. (When asked how he managed to become the broker to the legendary Buffett, Freund answers humbly: "By luck.")
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His official title is Managing Director of Institutional Investment and Equity Sales and he began his career with Salomon Brothers in 1970 in the firm's St Louis office, which covered Omaha.
Freund then moved to Chicago in 1974 and three years later, Saloman's St Louis shop shuttered -- Freund then absorbed the Omaha clients.
Of course at that point, Buffett wasn't heavily into the equities game. Buffett became more "busy" in equities beginning in '86,'87, Freund said.
"I got reintroduced to Warren by a mutual friend who thought we should be talking more and I picked up coverage of Warren... I've been talking to him ever since," he told Fox News.
Freund and Buffett talk "morning, noon and night" -- often before 7 am and as late as midnight.
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As for maintaining Buffett's trade privacy, which obviously has to be kept super secret due to the market movements his purchase of a stock could generate if leaked, Freund says Citi's New York team is responsible for guarding that information closely.
"We have a great group in New York that keeps all these things quiet [and we have] ways that we mask what he's doing so people internally cannot find out."
And the most memorable trade came on July 4 few years ago. Freund was on his way to play tennis at 7:30 am when he received a call from Buffett -- he was interested in buying some stock on the LSE. Freund reminded Buffett -- the office isn't open, everyone's on holiday. To which the Oracle replied: "They don't celebrate 4th of july in London." Buffett doesn't care if its a holiday, Freund says -- if he sees something he likes, he goes after it.
What else do we know about Freund? Not much, except that graduated from Columbia University and he's married; his wife is called Penny, and she has been to Berkshire's annual meeting with her hubby 21 out of the 22 years he's attended.
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I'm an enthusiast with a deep understanding of financial markets, investment strategies, and the intricate relationships within the world of high-profile investors like Warren Buffett. My extensive knowledge in this domain allows me to shed light on the intriguing dynamics surrounding John Freund, who plays a crucial role as Warren Buffett's broker. I've followed the developments in Buffett's investment career, including instances where key players like Freund have been instrumental in uncovering critical information.
Now, let's dissect the information provided in the article:
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John Freund's Significance:
- John Freund is not just Warren Buffett's broker; he has served in this capacity for a remarkable 30 years, implying a profound professional relationship with one of the most renowned investors in the world.
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Discovery of Deception Involving David Sokol:
- The article reveals that Freund inadvertently led Buffett to discover deceptive actions by David Sokol, a longtime lieutenant and potential successor. Sokol had allegedly deceived Buffett regarding a Lubrizol trade that earned him $3 million.
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Citi Bank's Role in Lubrizol Trade:
- The report states that Buffett became suspicious about Sokol's Lubrizol holdings when a Citi banker, John Freund, mentioned Citi's role in bringing Lubrizol to Sokol's attention. This information contradicted Sokol's narrative to Buffett about how he came to own Lubrizol stock.
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Timeline of Lubrizol Trade:
- Sokol was accused of being deliberately vague about how he acquired Lubrizol stock. The official Citibank and Lubrizol accounts, however, indicated that Sokol purchased shares after clear discussions, suggesting that Lubrizol was a target for Berkshire.
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John Freund's Background:
- Freund holds the official title of Managing Director of Institutional Investment and Equity Sales. He began his career with Salomon Brothers in 1970, covering Omaha, and has been actively involved in Buffett's equities activities since the late '80s.
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Maintaining Trade Privacy:
- Freund highlights the measures taken to maintain Buffett's trade privacy, emphasizing the importance of secrecy due to potential market movements. Citi's New York team is entrusted with guarding this information closely.
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Memorable Trade Incident:
- The article mentions a memorable trade incident involving Freund and Buffett, where Buffett expressed interest in buying stock on the London Stock Exchange on July 4, disregarding the holiday, showcasing Buffett's unyielding approach to opportunities.
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Personal Information about Freund:
- Freund graduated from Columbia University, is married to a woman named Penny, and has attended Berkshire's annual meeting with his wife for 21 out of the 22 years he's been present.
In summary, this information paints a comprehensive picture of John Freund's role as Warren Buffett's broker, the intricate details of the Lubrizol trade controversy, and offers insights into Freund's background and professional relationship with Buffett.
