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Former Berkshire Stock Picker Lou Simpson Opens Own Shop

January 21, 2011 | About:

Louis Simpson, the investor who picked stocks on behalf of billionaire Warren Buffett’s Berkshire Hathaway Inc. for more than a decade before stepping down, is going into business for himself.

The 74-year-old Illinois native is starting an investment- advisory firm with his wife Kimberly Querrey in Naples, Florida, according to documents filed Dec. 20 with the U.S. Securities and Exchange Commission. The company, SQ Advisors LLC, is preparing to manage money later this year for Simpson’s family and friends, as well as outside charities, he said in an interview.

Once identified by Buffett as a potential head of Berkshire’s investments in an emergency, Simpson retired after more than 31 years of selecting equities for its Geico Corp. auto-insurance subsidiary. Buffett, in Berkshire’s annual letter to shareholders for 2004, devoted a section to Simpson titled “Portrait of a Disciplined Investor,” saying his picks had produced an annual average return of 20 percent since 1980, compared with 14 percent for the Standard & Poor’s 500 Index.

“He just knocked the cover off the ball year after year after year,” said Jack Byrne, the former chairman of Geico who hired Simpson with input from Buffett in 1979. “I have been asking Lou for 20 years whether he would take a separate account with me.”

Simpson will handle investing while his wife, who turns 50 this month, will be president and chief compliance officer, according to the SEC filing. He estimated that the firm will begin with $150 million to $200 million under management.

Clients will have separate accounts with Simpson, who said he might have started an investment partnership “if I were a lot younger.” Simpson declined to comment when asked whether Buffett, 80, will be investing any money with him. Carrie Kizer, a spokeswoman for Berkshire, also declined to comment.

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Buffett gave us Simpson's track record with GEICO in the 2004 letter to shareholders:

Portrait of a Disciplined Investor

Lou Simpson Return
from Year
1980 23.7% 32.3% (8.6%)
1981 5.4% (5.0%) 10.4%
1982 45.8% 21.4% 24.4%
1983 36.0% 22.4% 13.6%
1984 21.8% 6.1% 15.7%
1985 45.8% 31.6% 14.2%
1986 38.7% 18.6% 20.1%
1987 (10.0%) 5.1% (15.1%)
1988 30.0% 16.6% 13.4%
1989 36.1% 31.7% 4.4%
1990 (9.9%) (3.1%) (6.8%)
1991 56.5% 30.5% 26.0%
1992 10.8% 7.6% 3.2%
1993 4.6% 10.1% (5.5%)
1994 13.4% 1.3% 12.1%
1995 39.8% 37.6% 2.2%
1996 29.2% 23.0% 6.2%
1997 24.6% 33.4% (8.8%)
1998 18.6% 28.6% (10.0%)
1999 7.2% 21.0% (13.8%)
2000 20.9% (9.1%) 30.0%
2001 5.2% (11.9%) 17.1%
2002 (8.1%) (22.1%) 14.0%
2003 38.3% 28.7% 9.6%
2004 16.9% 10.9% 6.0%
Average Annual Gain
20.3% 13.5% 6.8%

Even then, it is typically not I who make the buying decisions. Lou Simpson manages about $2½ billion of equities that are held by GEICO, and it is his transactions that Berkshire is usually reporting. Customarily his purchases are in the $200-$300 million range and are in companies that are smaller than the ones I focus on. Take a look at the facing page to see why Lou is a cinch to be inducted into the investment Hall of Fame.

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Rating: 3.6/5 (12 votes)


Davethebooker - 6 years ago    Report SPAM
Okay lou has a new young Bride , who he was going to spend his golden years with and relax. That was the press release from Berkshire. That was baloney. Remember during the B of A melt down , Buffet pointed the finger at lou for the ill timed B of A trade, it was a large loss.. Lou slipped out the back door gracefully, and is starting an investment house. Did I miss something ? I thought Lou was relaxing in florida. With his Viagra.

He was forced out of Geico . And his return to the game confirms it to me, no matter what anyone tells me. Actions speak louder than words. Then again maybe he is just playing with his house money. He overall returns are amazing hope his viagra holds up.

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