Recently, a non profit media article published by ProPublica questioning the insider trading of the "stock god" Buffett has continued to attract attention in the industry.
As of press release, Buffett and Berkshire have not responded to this. Buffett's longtime partner Charlie Munger believes that this is "completely impossible".
Why question Buffett's "insider trading"?
The reporter reviewed the article published on the official website of ProPublica - "How Warren Buffett Personally Invests in Berkshire Traded Stocks".
The manuscript suggests that Buffett has repeatedly stated in public that he owns a personal stock investment portfolio, but this portfolio has never been publicly disclosed. Buffett has always emphasized that his personal investment portfolio is separate from the company's holdings.
I can't buy the stocks that Berkshire is buying, "Buffett said. He also stated on another occasion that doing so would create a "conflict of interest". For example, if he buys stocks before Berkshire, he may enjoy a better stock price than shareholders, as Berkshire's large stock purchases often raise the price.
But the US Internal Revenue Service data obtained by ProPublica exposed Buffett's personal transactions over the past two decades. And these data show that Buffett sometimes says one thing in public and does another thing in private.
The manuscript lists three key pieces of information, including:
In April 2009, the US financial market was in the midst of a buffer after the outbreak of the financial crisis. Buffett has consistently expressed his optimism towards Wells Fargo Bank in public media, and Berkshire is also a long-term heavyweight shareholder of Wells Fargo Bank. On April 24th, just four days after Fortune magazine published an exclusive interview with Buffett's singing duo at Wells Fargo, his personal account sold off $20 million worth of Wells Fargo stocks; During this period, Wells Fargo Bank's stock price continued to rise by 20%.
Buffett's actions in August 2009 raised questions for ProPublica. At that time, Buffett sold $25 million worth of Wal Mart shares through his personal account, while Berkshire almost doubled its shareholding in Wal Mart in the same quarter.
In October 2012, Buffett's personal account sold $35 million in Johnson&Johnson shares over several trading days, similar to the time Berkshire disclosed the sale of Johnson&Johnson shares.
According to the manuscript, between 2000 and 2019, Buffett's personal account sold a total of $466 million in stocks, excluding government and corporate bonds. This is not excessive for its $100 billion wealth.
Buffett has also talked about his personal investment multiple times in public.
At the 2016 Berkshire shareholders' meeting, he avoided speculative questions about his personal trading. He said that the vast majority of his funds were Berkshire stocks, not his personal account, and he planned to donate almost all of his wealth to charitable institutions no matter what.
In February 2012, Buffett was asked on financial media CNBC why, despite his extreme admiration for JPMorgan Chase, Berkshire did not buy the company's stock? Buffett said, "Let me tell you a little secret. I hold some stocks of JPMorgan Chase. Since Berkshire does not own any shares in this giant bank, I can purchase it without any potential conflict issues
This question appeared for the second time at the Berkshire shareholders' meeting that year, and Buffett gave almost the same answer. He said he preferred Wells Fargo, but Berkshire was "buying stocks from Wells Fargo, which led me to withdraw from buying Wells Fargo," so he purchased stocks from JPMorgan Chase Bank for his personal account because it was his second choice.
This is one of the problems I encountered, "Buffett said." I can't buy what Berkshire is buying. I have some money, so I bought my second choice or small company
Charlie Munger: Buffett cannot do insider trading
After the release of ProPublica's manuscript, it has attracted continuous attention in the industry. But Buffett and Berkshire did not publicly respond. Buffett's former partner, Berkshire Vice Chairman Charlie Munger, expressed anger at this.
In an interview with the media, he said, "I firmly believe there is no possibility. Warren Buffett will never do anything extremely bad to make money for himself. He is more concerned about Berkshire's development than his wealth. He has donated all his money, and even no longer owns it
Munger also emphasized that Buffett has donated all his money, and he has done so. Those guys even said he used Berkshire to make money. Munger also referred to that article as "another absurd statement against Berkshire".
Who is ProPublica?
According to ProPublica's website, it was established from 2007 to 2008 as an independent non-profit news editing room that produces investigative news with moral power. Dig deeper into important issues and expose behaviors that abuse power and betray public trust.
According to reports, ProPublica has a team of over 100 dedicated journalists covering a range of topics including government and politics, business, criminal justice, environment, education, healthcare, immigration, and technology. Focus on stories that may inspire real-world influence. ProPublica stated that it is committed to promoting the important work of exposing corruption, informing the public of complex issues, and utilizing the power of investigative news to promote reform.