Meet John Freund: Warren Buffett's Broker Of 30 Years And The Citi Banker Who Alerted Him To Sokol's Deception (2024)
John Freund is not just Warren Buffett's broker of 30 years.
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.
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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?
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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.")
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.
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.")
Bank of America accounts for over 11% of Berkshire Hathaway's portfolio, making it the company's second-largest investment. (Apple, the largest investment, accounts for nearly 39% of the portfolio). At the end of March 2023, Buffett's company owns 1.01 billion shares, a value of about $33.45 billion.
“For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young,” Buffett wrote in the letter. “The casino now resides in many homes and daily tempts the occupants.”
Large financial firms, including Goldman Sachs and Morgan Stanley, offer prime brokerages. The minimum amount a client must have to use a prime broker is $500,000, though it's not uncommon for clients to have $50 million in assets.
As of the end of the fourth quarter of 2023, 66 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Occidental Petroleum Corp (NYSE:OXY). In addition to Occidental, Buffett also likes Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).
1. JP Morgan Private Bank. “J.P. Morgan Private Bank is known for its investment services, which makes them a great option for those with millionaire status,” Kullberg said. “With J.P. Morgan, each client is given access to a panel of experts, including experienced strategists, economists and advisors.”
Key Takeaways. Bank of America is one of the largest consumer banks in the United States, with $3 trillion in customer deposits and other assets. The largest shareholder is Warren Buffett's Berkshire Hathaway, which holds 13% of all marketable shares.
Berkshire Hathaway has exited Wells Fargo, Goldman Sachs, and other lenders since early 2020. Buffett said he soured on some banks after they misled investors and made basic mistakes.
Warren Buffett typically does not give money to individuals, although he frequently donates to charities. However, he has in the past forwarded individual requests for money to his sister, Ms. Doris Buffett, who operates an organization called the Sunshine Lady Foundation.
Berkshire has also disclosed some additional buying in the first quarter of 2024. The conglomerate bought more shares of two tracking stocks -- Liberty SiriusXM Series A (LSXMA 0.57%) and Liberty SiriusXM Series C (LSXMK 0.57%) -- and boosted its position in Occidental.
Buffett himself has pledged that 99% of his wealth will go to philanthropy during his lifetime or upon his death. As of 2023, the shares he's already given away were worth about $50 billion based on their value at the time of donation, or about $130 billion given Berkshire Hathaway's stock value at the time.
Simplicity has been at the center of Buffett's strategy for decades. With Berkshire holding a record $168 billion of cash and short-term investments on its balance sheet, investors must surely be wondering what Buffett is thinking. I'd say he just told us, and I think it makes a lot of sense.
Berkshire Hathaway Energy's HomeServices of America (see complete list of companies) is a residential real estate brokerage firm based in Minneapolis, Minnesota, and founded in 1998. HomeServices has operations in 28 states and over 22,000 sales associates.
Anyone can invest in Berkshire Hathaway if they have enough money to buy at least one Class B share (about $360 in late 2023). For comparison, hedge funds are open only to accredited investors, meaning those with a high income or net worth and who can meet the fund's minimum investment, which can be $1 million or more.
Introduction: My name is Nathanael Baumbach, I am a fantastic, nice, victorious, brave, healthy, cute, glorious person who loves writing and wants to share my knowledge and understanding with you.
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