Knowing Buffett's moves not always a money-maker
By Ben Berkowitz
NEW YORK (Reuters) - Knowing what Warren Buffett is going to do a few weeks before he does it is not the sure-fire money-maker you might think.
The iconic investor and champion of ethical corporate behavior is under fire over the revelation that his presumed successor, David Sokol, bought shares in Lubrizol Corp <LZ.N> before pushing Buffett to acquire the company.
That $9 billion deal netted Sokol a profit of nearly $3 million. It also raised questions about whether others inside Buffett's holding company Berkshire Hathaway Inc <BRKa.N> <BRKb.N> have ever bought into stocks they knew Buffett might take a shine to later.
A look back at five other high-profile deals Buffett made in the last three years shows the same kind of foresight Sokol had would have been very lucrative at some times -- and at other times a losing proposition.
Reuters looked at the acquisition of railroad Burlington Northern Santa Fe in August 2009 and four investments Berkshire made in 2008 -- Goldman Sachs Group Inc <GS.N>, Dow Chemical Co <DOW.N>, Wm. Wrigley Jr. Co and Chinese car maker BYD <1211.HK>.
In each case, Reuters compared the company's share price in the first trading session after the deal was announced with its closing share price 70 days before the deal -- the precise window Sokol had from his first purchase of Lubrizol shares to the announcement of the acquisition.
An investor who bought 100,000 shares of each company's stock 70 days before the deals were announced would have made money on Wrigley ($1.89 million), Burlington ($1.32 million) and BYD ($46,296).
But that same clairvoyant investor would have lost a fair bit of money on Goldman Sachs ($2.48 million) and Dow Chemical ($788,000).
(Reporting by Ben Berkowitz, editing by Gerald E. McCormick)