Warren Buffett has been celebrated for his long-term, buy-and-hold approach to investing. So when does the Berkshire Hathaway (NYSE: BRK-B) Chairman sell a stock? I recently asked Georgetown University McDonough School of Business Professor Prem Jain, author of Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing.

Mac Greer: In 1998, Buffett buys a little over 14 million shares of Coca-Cola (NYSE: KO). At the time, he states that his favorite holding period is forever. And yet we also know that there have been times where Buffett has sold major holdings, including Freddie Mac, Disney (NYSE: DIS), and PetroChina (NYSE: PTR). What are the main reasons Warren Buffett sells?

Prem Jain: Buffett has strictly followed the principle of holding a company forever for wholly owned subsidiaries. These include GEICO, Dairy Queen, Nebraska Furniture Mart, and many dozens more. To the best of my knowledge, he has never sold a 100% owned subsidiary.

Even for common stock investments such as those in Coca-Cola or American Express (NYSE: AXP), Buffett sells infrequently. The main reason Buffett adheres to this principle of holding forever is that he is careful to select only outstanding companies to invest in. He does sell a stock when the stock is fully priced (as in the case of PetroChina) and, more importantly, when the company's management appears to be drifting away from focusing on enhancing shareholder value (as in the case of Freddie Mac). I believe that Disney shares were also sold because Tom Murphy was no longer running the company and Disney's then-CEO, Michael Eisner, was criticized heavily for his high compensation.

Overall, it appears that whenever Buffett decides that a company's management is no longer outstanding, he loses interest in that company. As I discuss in my book, Buffett-style investing is more about people and less about products. Once you find good people, you hold onto them forever.

Greer: What would Buffett regard as his biggest investing mistake and why would he consider it a mistake?

Jain: Buffett discusses two types of investing mistakes: mistakes of omission and mistakes of commission. Mistakes of omission are the mistakes of not buying certain investments when one should. At one time, Buffett mentioned that he should have invested in Wal-Mart (NYSE: WMT), as he understood the company well. By not investing in Wal-Mart, he missed the opportunity to make billions of dollars. This may be considered his biggest known mistake of omission.

I consider his acquisition of General Re for $22 billion in 1998 to be his biggest mistake of commission. My calculations in Buffett Beyond Value show that over the ensuing 10 years, General Re lost more than $6 billion in operating profits. Including other gains, the annualized 10-year return from the General Re investment has been only in low single digits. In addition, General Re was investigated by the U.S. Department of Justice, and its former CEO Ron Ferguson was sentenced to two years in prison. Buffett thinks that General Re has now righted the ship, but it clearly has been a difficult journey.

Jain: Who do you think will succeed Warren Buffett? Who do you think should succeed Warren Buffett?

Greer: Buffett holds three managerial positions. He is the Chairman of the Berkshire board, he is also the CEO; and he is responsible for about $100 billion of stocks and bonds held by Berkshire. I believe that Warren Buffett's son Howard Buffett, a current director, will become the Chairman of the board. Howard Buffett will be the most effective person in terms of keeping the culture at Berkshire intact.

In terms of CEO, Ajit Jain is the most eligible candidate. He is an insurance man, and Berkshire is largely an insurance company. Buffett talks to Ajit Jain every day and has praised him lavishly in almost every annual report for many years. Buffett has even suggested that Ajit Jain is more important to Berkshire than Buffett and Charlie Munger.

In terms of managing the stock and bond portfolio, Buffett's role is likely to be divided among a few people. It is important to realize that because Berkshire is fully invested at this time, it is not critical to find new fund managers in short order. However, two additional names that come to my mind are Seth Klarman and Li Lu.

Want more? Check out How Buffett Beats the Market and Buffett's BP Play?

Mac Greer doesn't own any of the stocks discussed. American Express, Berkshire Hathaway, Coca-Cola, Disney, and Wal-Mart are Motley Fool Inside Value picks. Coca-Cola is also an Income Investor pick. Berkshire Hathaway and Disney are Motley Fool Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway, Coca-Cola, and Wal-Mart and has a disclosure policy.