http://www.chicagotribune.com/business/ct-confidential-john-freund-0203-biz-20150203-column.html
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John Freund, who has worked for 30 years as a stockbroker for Warren Buffett, above, is retiring from Citigroup at the end of March. (NICHOLAS KAMM, AFP/Getty Images)
Managing Director John Freund is leaving Citigroup.
After more than 30 years working in Chicago as Warren Buffett’s stockbroker, Citigroup Managing Director John Freund is retiring from the bank at the end of March, the company said.
Freund, 69, managed to make big headlines only once: For altering the course of succession plans at Buffett’s Berkshire Hathaway after he inadvertently warned the Omaha billionaire that a longtime heir apparent had deceived him over a stock trade in a company called Lubrizol.
Day-to-day Freund has executed some of Buffett’s most important decisions, buying up shares on his behalf in everything from Coca-Cola to Freddie Mac.
“I remember being at the (Berkshire Hathaway) annual meeting and passing Warren a note that we were buying some R.J. Reynolds and he said, ‘Keep on going,'” Freund said. “And I had to go down and, believe it or not, use a pay phone, because we didn’t have cellphones in ’89.”
Freund started with Salomon Brothers’ St. Louis office in 1970, moved to Chicago in 1974 and got the Omaha territory back when Salomon closed its St. Louis office in the late ’70s. (Salomon became Travelers Group, which became Citi.)
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“One time I was going to go play tennis, and it was the Fourth of July,” Freund said in a 2008 interview with Fox Business, a story he repeated to me. “Warren called me at 7:30 in the morning and said, ‘You know, I’d like to buy something overseas.’ It happened to be in London. And I said, ‘Warren, there’s nobody in (the office).’ He said, ‘I know. But they don’t celebrate the Fourth of July in London.’ That night I got on the phone with somebody in London, and we started buying a particular stock that night. He doesn’t care if it’s a holiday. He’s always thinking about the market.”
Freund says he’s not retiring from Wall Street, just retiring from Citi after 44 years, and will be looking for a job. He agreed to answer a few questions about the ride thus far. Here is an edited transcript.
Q. Secrecy has to be so important to execute one of Buffett’s trades. If word gets out, the stock price will skyrocket before you have a chance to finish buying up the shares. And they have to take time. How do you do it?
A. The positions are so large. You have to be careful how you work the orders. And you have to make sure that the people you’re working with, whoever it may be in New York, London or Asia, they’re ethical, upright people who keep their mouths shut.
Q. Has there ever been a time when people figured it out it was him?
A. There were one or two times when some of the companies figured out it may have been Warren buying their stock. He had gotten a call. All that did was it made us go around and recheck to see where any leak may have occurred and try to seal that or dampen down the process so fewer people were aware. … I don’t think we ever found a leak.
Q. That process is probably worse than a colonoscopy.
A. I wish I had a dollar for every rumor I heard about what he was buying. I could have retired years ago. Most of the things you hear are just so totally off the wall and wrong, it’s unbelievable. When people call me, they say, ‘I hear Warren’s buying X, Y, Z.’ I say, ‘I heard that rumor, too.’ That’s how I deal with them.
Q. Why would anyone even call you? You can’t say anything.
A. They always hope you’ll say something and drop a hint. That’s why. Nothing ventured, nothing gained.
Q. You worked on Wall Street from the Midwest. Was it an advantage or disadvantage?
A. In 1976 or ’77, Michael Bloomberg asked me to move to New York to run the convertible bond operation for Salomon Brothers. … On the way back on a train ride from Harrison, N.Y., to Manhattan, my wife and I looked at each other and said, ‘You know, we’re from the Midwest.’ And I had basically already accepted the job. And I called Michael and I said ‘We’re Midwestern people. I don’t think I want to live again in New York.’ And he said he understood. And he said, ‘This will not hurt you. I appreciate your decision. I understand.’ Michael was true to his word. I was worried it might hurt me.
Q. What do you feel like at the end of the day, after a flash crash or disastrous day on the market?
A. Exhausted. If you are as intense as I am, when you have a day when there’s been a big move in the market, you are watching every tick for every client. You are living the trade.
Q. Is there one crash that was the scariest for you?
A. I think ’87 was just so unexpected, and everybody thought portfolio insurance would work, and it just exacerbated the problem. And then the financial crisis. Those two were the worst. I think in ’87 you weren’t sure if the market was going to open again for awhile because it was so bad. With the financial crisis, you wondered if any of the banks were going to survive. The government did a great job. Main Street may not like it, but if the banks had gone away, we would have been in a major Depression.
mmharris@tribpub.com
Twitter @chiconfidential