One of the major cogs of the three headed monster at Berkshire Hathaway (BRK-A) is stepping down. Lou Simpson, the Geico portfolio manager, announced his plans to retire today. This is important despite the fact that it has gone largely unnoticed by most major media networks.
Simpson is very similar to Buffett sidekick Charlie Munger. Both men have operated under the radar for years at Berkshire Hathaway. He successfully managed Geico’s 4 billion dollar portfolio in anonymity for 25 years. Simpson keeps such a low profile that there is not even a Wikipedia page for him.
So, why is the loss of Simpson important?
The loss of Simpson is important because he is a man that Buffett trusts. He trusted him so much that Buffett let him make his own investment decisions with no oversight. As any good investor knows, trust is essential in the investment industry. If you don’t believe in yourself or whoever is managing your portfolio then you will never be satisfied. Buffett has complete confidence in Simpson.
Some of the stocks in Berkshire’s portfolio are picks of Lou Simpson. Buffett told the Chicago Tribune that “people are always attributing to me what he’s doing”. Buffett said that investments in the hundreds of millions are probably stock picks of Simpson’s. Buffett is quoted in the Tribune as saying that “at least $1 billion of whatever it is we buy. So Nike, those things are his, while Wells Fargo, Kraft, those will be mine.”
Based on that information, here are 5 stocks that I believe Simpson selected for the Berkshire Hathaway portfolio:
I would be willing to throw Comcast, Ingersoll Rand, and Nalco Holding into that group. Everyone assumed that Buffett was extremely bullish on Republic Services (me included). The interesting part is that Republic Services may have actually been a pick of Simpson and not Buffett.