Middleburg Financial: The Foundation of Sokol’s “Mini Berkshire”?

Middleburg Financial, a small bank holding company with a base of operations in the prosperous suburbs of Northern Virginia, has been in the news over the past few days due to David Sokol’s comments on CNBC indicating that he plans to build a “mini-Berkshire” after resigning from Berkshire Hathaway in the wake of revelations regarding his trading in shares of Lubrizol Corporation. Read this article for our opinion on whether Mr. Sokol will use Middleburg Financial as the base for his future business activities.

Sokol’s Statements on CNBC Contradict Lubrizol’s Proxy Statement

In an article posted earlier today, we provided the video of David Sokol’s CNBC appearance along with commentary regarding his statements. As part of that article, we raised the issue of Mr. Sokol’s statements on CNBC contradicting the Lubrizol proxy statement account of the development of the transaction with specific reference to Mr. Sokol’s characterization of his discussions with bankers at Citigroup on December 13, 2010. Read this article for a more extended discussion on this topic.

Sokol’s Resignation Raises Questions Regarding Lubrizol Transaction

In a press release issued this afternoon, Berkshire Hathaway Chairman and CEO Warren Buffett announced the resignation of David Sokol. Mr. Sokol served as Chairman of several Berkshire subsidiaries and many observers, including The Rational Walk, previously believed that he was the front runner to eventually assume the CEO position at Berkshire Hathaway. Read this article for our views on the resignation.

NetJets Posts Profits But Margins Remain Under Pressure

In a recent interview with Aviation Week, NetJets Chairman and CEO David Sokol stated that he is “comfortable” with his previous prediction that the company will post pre-tax profits of $200 million for 2010 and that “the business should always be profitable” in the future. However, Mr. Sokol also indicated that NetJets is likely to evolve into a fundamentally low margin business that may deliver 4 to 5 percent net profit margins in a “steady state, long term” environment. Berkshire Hathaway paid $725 million to acquire NetJets in 1998 and incurred cumulative pre-tax losses of $157 million from the time of the acquisition through the end of 2009. Read this article for more details.

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