Is This Company David Sokol's Berkshire Hathaway?
"What I've wanted to do for the last two-and-a-half years is step back and basically invest our family money and build kind of a mini-Berkshire, if you will."
-- David Sokol on CNBC, March 31.
You remember David Sokol, the fellow who resigned from Berkshire Hathaway (NYS: BRK.B) under a cloud of controversy, three days before making that statement. Sokol had traded shares of Lubrizol on his own account while simultaneously representing Berkshire Hathaway in assessing the company as a potential acquisition. Berkshire Hathaway eventually purchased Lubrizol at a premium to the price Sokol paid for his shares.
Sokol took advantage of the recent correction to buy another stock, that of Virginia community bank Middleburg Financial (NAS: MBRG) . Since Aug. 8 through last Friday, Sokol has bought 50,691 shares at an average price of $14.54. This isn't Sokol's first purchase; the bank disclosed that he had become a company insider with a 5.01% ownership stake in a November 2008 filing. He's now the largest shareholder, owning more than a fifth of the company's shares outstanding.
In 1967, Warren Buffett, then a young money manager, took over a textile mill by the name of Berkshire Hathaway. While the textile business eventually died, Berkshire became the holding company under which he eventually built the hugely successful conglomerate we know today. Does Sokol have the same plans for Middleburg? Perhaps. There are, after all, other companies that model themselves to varying degrees after Berkshire Hathaway, including insurers Markel (NYS: MKL) and Fairfax Financial, retailer Sears Holdings (NYS: SHLD) , and Sardar Biglari's vehicle, Biglari Holdings (NYS: BH) .
All the same, Sokol knows he'll be hard-pressed to match Berkshire's success. Even if he had the same level of capital allocation acumen as Buffett, he's starting out much later in life than his former boss and half of the trick is starting early and compounding returns over long stretches. Or as Buffett wrote in June: "My wealth has come from a combination of living in America, some lucky genes, and compound interest."
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At the time this article was published Fool contributorAlex Dumortierholds no position in any company mentioned.Click hereto see his holdings and a short bio. You can follow himon Twitter. The Motley Fool owns shares of Biglari Holdings, Markel, and Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Markel and Berkshire Hathaway. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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