The NetJets poker tournament took place this past weekend. There will probably be some media coverage of it, and Buffett has interesting choices to make in what he says that might indicate how he's going to deal with David Sokol and NetJets going forward. I'm looking forward to seeing him navigate this situation as time passes; Buffett is good at these things and it's a level 10 challenge for him. The poker tournament, held at Wynn Vegas and attended by an eager group of invited NetJets owners who come mainly for the chance to spend a weekend socializing with Buffett, was the company's most popular marketing event until 2009. Buffett was unhappy with the lavishness of the tournament when NetJets' financial results started going south. Instead of scaling it back, Sokol canceled the tournament. Now, it has been reinstated because customers wanted it back.
This is one example of how the repair of NetJets, still ongoing, has shifted to include undoing things that were done by Sokol. There are financial ramifications to some of these changes. Over time, Buffett will be making a decision how much of this to reveal, meaning whether to continue to allocate blame 100% to prior management (Santulli), or transfer part of it to Sokol. NetJets reported breakeven results in the second quarter. Influencing his decision going forward, I suspect the numbers will get worse in the back half of the year.
Other factors that might affect Buffett's thinking have to do, I suspect, mainly with what is going on in the Sokol investigation. Buffett took a clear stand on the propriety of Sokol's stock trading at the shareholder meeting, but he also said some very nice things about Sokol, which I interpret as a proffer to Sokol/his lawyer to cooperate within the range of what is possible on legal issues and avoid a war of words that could result in MAD (mutual assured destruction). Sokol did not pick up the olive branch, but rather repaid Buffett by releasing a combative statement immediately after the meeting through his lawyer that accused Buffett of "transparent scapegoatism."
Since then, Berkshire has gone into radio silence. This has been interpreted in some quarters to mean that the issue has essentially gone away, but it really only indicates that people are working behind the scenes in a slow-moving legal situation while keeping a poker face in public. Therefore, we might start to see from Buffett's comments about NetJets some subtle clues about how he is planning to proceed.
Normally, it would not be in Buffett's interest to denigrate Sokol's management style, which Buffett approved and oversaw. However, if Buffett decides to throw the book at Sokol (the book in Buffett's case is a ten-pound bound copy of the shareholder letters) we may learn about actions Sokol took that were costly to NetJets and find that perhaps Buffett was not informed of them.
Either way, Sokol is playing with the short stack in this situation. Buffett, who is a pretty good poker player, knows it. Stay tuned.