Buffett can't feel much love to his "Woodstock"

Billionaire Warren Buffett speaks during a press conference in New Delhi, March 24, 2011.

Credit: Reuters/B MathurBy'm Berkowitz

OMAHA, Nebraska | Fri 29 april 2011 2: 45 pm EDT

OMAHA, Nebraska (Reuters)-Warren Buffett can use a root beer float right about now--the investment guru feels the warmth of 40,000 shareholders who want criticism of him, even push him to retire or whether he has lost contact.

Berkshire Hathaway shareholders are descending on Omaha for the annual meeting by the conglomerate, known as "the Woodstock for capitalism." News coverage of the event is often focused on Buffett a regular guy in his birth town, eating on favorite local spots such as Piccolo of, where he the virtue of the floats praises.

This year, however, there seems to be only one topic of conversation in the city--Berkshire's extraordinary claims about the behavior of one of the top executives.

While the Berkshire board scathing condemnation of former Buffett Lieutenant David Sokol on Wednesday may have been designed as an attempt to exonerate himself, Buffett has many questions left open. Buffett's public wants answers to them on Saturday.

"I think he has his I and put his T's from a legal point of view, but not much more than that is distributed. That is sad for Warren Buffett, because I think he believes that the statements that he makes, "said Paul Argenti, professor at the Tuck School of Business at Dartmouth College.

"He is the best and I expect the best of him, and I guess that's why everyone is so disappointed," said Argenti, who has Buffett appear in his classes in the past.

Berkshire's actively traded shares were up 0.2% at $ 83.44 on Friday afternoon. The stock falls under pressure since the episode Sokol broke at the end of March, 2.3 percent as the S & P 500 gained 2.7% in the same period.

One large Berkshire investor said it was fair for Buffett to be put on the spot with tough questions, but that the Sokol scandal in time would pass.

"I don't think anything should be brushed out," said David Winters, chief executive of Wintergreen advisers, which almost 65 million dollars in Berkshire class B shares as of the end of last year. "What should be focused on is the underlying strength of the companies."

' TAKE EACH QUESTION '

Even if the focus moves in time, as Winters, for now it is still very much on the scandal.

Friday of Omaha World-Herald newspaper led with a photo of Sokol, not Buffett. Within the paper, the Attorney General of Nebraska--a Republican who has extensive financial support received from Sokol--defended his friend and rejected any proposal had committed a crime.

An 18-page report released Berkshire's Board of Directors this week examined the behavior Sokol, the former President MidAmerican Energy that was widespread Buffett's probable successor at the helm of Berkshire. The damning report suggests Sokol Berkshire misled about his personal investment in Lubrizol Corp.

It was an extraordinary disclosure, and change the tone of the annual meeting on Saturday.

"It was a really good report," said Jeff Matthews, a hedge fund manager and author of the new Buffett book "secrets in Plain Sight." Matthews is one of the most outspoken critics of the investor's recently.

"I think he's going to do exactly what he should do, is take each question asked of him," Matthews said in an interview with Reuters Insider.

Even with Sokol Omaha problems remains a Buffett city. Thursday night in his favorite steakhouse, Gorat, the dining room was full of shareholders, including families, who are buzzing about the weekend. The restaurant is the sale of t-shirts--$ 15 plus tax--with a caricature of an infant Buffett playing with toys.

SECURING THE DEBT

From a legal standpoint, if the aim of the report was the focus of the story back to Sokol and relieve pressure on Buffett, most experts think that it has succeeded.

While the report makes clear that Buffett was essentially tricked by one of his top lieutenants, it also repeatedly emphasized that any deception was purely Sokol and probably intentional.

"With rapid reporting, Berkshire is essentially agree with the public and the press and pinning the blame entirely at Sokol," said Jay Brown, a professor at the University of Denver.

Buffett will be still face tough questions on Saturday about what happened-in particular his statement in late March that he did not feel that Sokol had done anything illegal, a conclusion the audit committee report seems to contradict.

However, the question is whether there is a contradiction.

"It is possible that the real purpose of the Declaration was to correct Buffett's statement, announcing the internal ethical rules within (Berkshire), and then close the story once and for all," said Tamar Frankel, a professor of law at the University of Boston.

(Reporting by Ben Berkowitz, additional reporting by Moira Herbst in New York; Edit by Bernard Lewis and Matthew Orr)

View the original article here