Quarterly updates on Berkshire Hathaway’s stock portfolio are eagerly anticipated by investors all over the world as they seek to get a glimpse inside the mind of CEO Warren Buffett.
Financial media widely cover the updates to Berkshire’s stock portfolio, which are filed with the SEC 45 days after the end of each quarter in a form called 13F. Reporters scour the changes to the portfolio and file articles on what stocks Buffett bought and sold that quarter.
The problem is, as Buffett makes clear in a recent interview with the Chicago Tribune, many of the stock buys and sales attributed to him are actually the work of Lou Simpson, who controls the investment portfolio at Geico, a subsidiary of Berkshire.
Tribune columnist Melissa Harris broke the news today that Simpson, a 73-year-old Chicago resident, is retiring at the end of the year following decades of service to Geico.
Buffett makes clear in the article that he wishes Simpson would stay. Buffett himself will take over management of Geico’s investment portfolio, though it seems possible that he might give the job at some point to one of the candidates in the running to take over responsibilities for company-wide investments in the post-Buffett era (Chinese-American investor Li Lu is believed to be a leading candidate).
In the interview with the Tribune, Buffett gives his followers some insight into how to determine whether a stock pick is Simpson’s or his own.
"If you see a purchase on a company in the $300- to $400-million range, odds are very good that's Lou's," Buffett is quoted as saying. "I'm going to want to buy at least $1 billion of whatever it is we buy.”
Given that, we can surmise that of the most recently announced Berkshire stock picks, only Johnson & Johnson was the work of Buffett.
The smaller buys -- Becton Dickinson, Nalco Holding, Iron Mountain, Fiserv and Sanofi Aventis -- were probably Simpson’s picks.
Other than J&J, the other billion-dollar-plus positions in Berkshire’s common stock portfolio are (in order of most to least): Coca-Cola, Wells Fargo, American Express, Procter & Gamble, Kraft Foods, Walmart, Wesco Financial, ConocoPhillips and U.S. Bancorp.
It seems a safe bet that those are all Buffett’s choices, as is the case with large preferred stock stakes in companies such as General Electric and Goldman Sachs.
That’s not to say that investors shouldn’t also closely consider the stock picks of Simpson. As the Tribune writes, “he manages a $4 billion portfolio that posted annual losses only three times from 1980 to 2004, and outperformed the S&P 500 18 of those years.” The outperformance has continued since 2004. The two men often gravitate to similar stocks.
The Tribune piece gives a lot of interesting details about Simpson’s life and investment style. Those who wish to find out more might consider Robert Miles’ “The Warren Buffett CEO,” which includes a chapter on Simpson. Click here to read about that book.
Financial media widely cover the updates to Berkshire’s stock portfolio, which are filed with the SEC 45 days after the end of each quarter in a form called 13F. Reporters scour the changes to the portfolio and file articles on what stocks Buffett bought and sold that quarter.
The problem is, as Buffett makes clear in a recent interview with the Chicago Tribune, many of the stock buys and sales attributed to him are actually the work of Lou Simpson, who controls the investment portfolio at Geico, a subsidiary of Berkshire.
Tribune columnist Melissa Harris broke the news today that Simpson, a 73-year-old Chicago resident, is retiring at the end of the year following decades of service to Geico.
Buffett makes clear in the article that he wishes Simpson would stay. Buffett himself will take over management of Geico’s investment portfolio, though it seems possible that he might give the job at some point to one of the candidates in the running to take over responsibilities for company-wide investments in the post-Buffett era (Chinese-American investor Li Lu is believed to be a leading candidate).
In the interview with the Tribune, Buffett gives his followers some insight into how to determine whether a stock pick is Simpson’s or his own.
"If you see a purchase on a company in the $300- to $400-million range, odds are very good that's Lou's," Buffett is quoted as saying. "I'm going to want to buy at least $1 billion of whatever it is we buy.”
Given that, we can surmise that of the most recently announced Berkshire stock picks, only Johnson & Johnson was the work of Buffett.
The smaller buys -- Becton Dickinson, Nalco Holding, Iron Mountain, Fiserv and Sanofi Aventis -- were probably Simpson’s picks.
Other than J&J, the other billion-dollar-plus positions in Berkshire’s common stock portfolio are (in order of most to least): Coca-Cola, Wells Fargo, American Express, Procter & Gamble, Kraft Foods, Walmart, Wesco Financial, ConocoPhillips and U.S. Bancorp.
It seems a safe bet that those are all Buffett’s choices, as is the case with large preferred stock stakes in companies such as General Electric and Goldman Sachs.
That’s not to say that investors shouldn’t also closely consider the stock picks of Simpson. As the Tribune writes, “he manages a $4 billion portfolio that posted annual losses only three times from 1980 to 2004, and outperformed the S&P 500 18 of those years.” The outperformance has continued since 2004. The two men often gravitate to similar stocks.
The Tribune piece gives a lot of interesting details about Simpson’s life and investment style. Those who wish to find out more might consider Robert Miles’ “The Warren Buffett CEO,” which includes a chapter on Simpson. Click here to read about that book.
