Warren Buffett's words and actions on personal trading may be opposite: Report (2024)

Warren Buffett did not respond to ProPublica's queries, the report added.

Inconsistencies in Personal Trading

Buffett, who has consistently emphasized avoiding personal trades aligned with Berkshire's moves, has a track record that tells a different story, the report states. It adds that leaked IRS data covering two decades, exposes at least three instances where Buffett traded stocks in his personal account just before or during the same quarter as Berkshire's transactions, potentially violating the company's ethics policies, authored by Buffett himself.

Also Read: Warren Buffet's Berkshire Hathaway Q3 net loss widens to $12.77 billion, operating profit up 41% YoY

The policy requires all Berkshire's securities transactions to be publically disclosed before employees can personally trade the stock.

In 2011, a rare scandal involving David Sokol, then heir apparent to Buffett, who resigned over personal stock trades, did not damage Buffett's reputation.

Public Endorsem*nt of Wells Fargo

Among Buffett's moves tracked by the publication include his enthusiastic endorsem*nt of Wells Fargo in an interview with Fortune magazine back on April 20, 2009. He had then lauded it for its "superior business model" compared to other major banks. Buffett, who is looked up to by many investors as a model thus significantly influenced market dynamics, causing a substantial +20 percent surge in Wells Fargo shares, the report said.

Also Read: 8 money lessons to learn from Warren Buffett’s letters to shareholders

By April 24, Wells Fargo had jumped 13 percent. However, the report noted that hidden from public view, Buffett privately sold $20 million worth of Wells Fargo shares on the same day, revealing a contradiction between his words and actions.

Contradictory Moves

Another instance is one in October 2012 when Buffett sold $35 million worth of personal shares of Johnson & Johnson, which Berkshire also did. However, the company's moves were not revealed in a press release but in the quarterly filing, which revealed the sale when compared to the previous quarter with no specific date of sale. It also did not disclose the sales made in the following two quarters. Here, by possibly shedding his stake first, Buffett avoided the price dip that Berkshire's sales caused for Johnson& Johnson stock, the report noted.

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The third instance was in August 2009, when Buffet sold $25 million of Walmart stocks in his personal account while Berkshire doubled its stake in the company during the same quarter. Exact dates were unavailable, the report said but noted that Buffett's choices for his personal and company portfolios seem to be contradictory and verged on violating insider trading policies.

Personal Portfolio Insights

The leaked records unveil Buffett's personal stock sales amounting to at least $466 million between 2000 and 2019. While this may seem a modest sum for a billionaire of his stature, the absence of data on stocks bought and held leaves the actual size of his personal portfolio unknown. Buffett remains tight-lipped about his personal trades, and questions about these actions remain unanswered.

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Warren Buffett, a financial luminary, faces scrutiny as revelations about his personal trading practices cast a shadow over his consistent public image. The apparent inconsistencies between his words and actions highlight the challenges in maintaining ethical standards, even for the most revered figures in the financial world.

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Published: 12 Nov 2023, 08:54 AM IST