Berkshire Hathaway Inc. Vice Chairman Charles Munger said his family was invested in BYD Co. “for years” before his company took a stake in the Chinese automaker and that he disclosed the financial interest to Berkshire CEO Warren Buffett.
“I certainly suggested that Berkshire look at investing in something that the Mungers were already invested in, but we’d been in it for years,” he said Tuesday.
The Munger investment was cited last week by former Berkshire manager David Sokol in a CNBC interview as precedent for his purchase of Lubrizol Corp. shares before recommending the company as a takeover target to Buffett. Sokol, whose resignation from Omaha-based Berkshire was announced by Buffett on March 30, said there was nothing unethical about purchasing about 96,000 Lubrizol shares in January.
“I don’t believe I did anything wrong,” Sokol said, according to a CNBC transcript. “Mr. Munger owned a significant piece of BYD before he mentioned it to me to go look at it.”
Munger, 87, said his family invested with money manager Li Lu in BYD through a partnership that has a stake of about 3 percent and that he urged Sokol, then the leader of Berkshire’s energy business, to scout the business.
“I had Dave look at it, because I knew I couldn’t talk Warren into buying into the damn thing by myself,” Munger said. “It’s a new technology-type investment. But David went over there, and he made the deal for Berkshire.”
Berkshire invested about $230 million in BYD in 2008 and holds a stake of almost 10 percent in the company. The investment was valued at $1.18 billion at the end of 2010, Buffett said in the company’s annual report.
Munger said his family holds a “little more” than half of the fund with the BYD investment, and that he didn’t participate in Berkshire’s discussions on its deal.
“I recused myself,” Munger said. “But there’s no question about it, that I caused Dave’s original interest.”