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.
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.
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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.")
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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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By choosing John Freund as his broker, Buffett had a wealth of expertise and resources he had access to. Buffett can leverage his broker's knowledge and tools to support his investment choices.
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Introduction: My name is Pres. Carey Rath, I am a faithful, funny, vast, joyous, lively, brave, glamorous person who loves writing and wants to share my knowledge and understanding with you.
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