RIP Louis Simpson

Louis Simpson, who helped pick stocks for Warren Buffett, has died at age 85.

Simpson spent more than three decades selecting equities for Geico, the auto insurer owned by Omaha, Nebraska-based Berkshire Hathaway Inc. Buffett, Berkshire’s billionaire chief executive officer whose stock-picking prowess earned him a worldwide following, was a longtime stakeholder in Geico and helped choose Simpson to be its chief investment officer in 1979. When Berkshire acquired full ownership of Geico in 1996, Buffett asked Simpson to continue managing its stock portfolio.

Simpson was a “Hall of Famer” as an investor and “the best investment manager in the property-casualty business,” Buffett wrote in annual letters to Berkshire shareholders. In his 2004 letter, Buffett included a section called “Portrait of a Disciplined Investor,” saying Simpson’s picks had produced an annual average return of 20 percent since 1980, compared with 14 percent for the S&P 500 Index.

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One of Simpson’s successes came with the breakup of American Telephone & Telegraph Co. in the 1980s. He invested about 40 percent of Geico’s capital in three of the regional “Baby Bell” operating companies formed by the dismantling. The stake doubled over two years and added $400 million to the insurer’s $1 billion net worth, according to Jack Byrne, the former chairman of Geico. His other notable investments included Nike Inc., an athletic apparel maker, and CarMax Inc., which sells used autos.

“He just knocked the cover off the ball year after year after year,” Byrne said in a 2011 interview. “I have been asking Lou for 20 years whether he would take a separate account with me.”

Posted by on January 10th, 2022 at 3:24 pm


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