The Evolution of Lou Simpson: From GEICO’s Investment Guru to Berkshire Hathaway Board Member

Lou Simpson is one of the most respected investment managers of his generation. He spent more than three decades at GEICO, a Berkshire Hathaway subsidiary, where he delivered exceptional returns for the company. His success was built on a deep understanding of businesses and a rigorous investment process that focused on buying high-quality companies at reasonable prices. After retiring from GEICO in 2010, Simpson joined the board of directors of Berkshire Hathaway, where he continues to provide valuable insights and counsel to Warren Buffett and Charlie Munger. In this article, we’ll explore the evolution of Lou Simpson, from his early years to his current role at Berkshire Hathaway.

Lou Simpson: The Early Years

Lou Simpson was born in Detroit, Michigan, in 1936. He grew up in a working-class family and attended the University of Detroit Jesuit High School. After graduating, he enrolled in Western Michigan University, where he earned a degree in business administration. Simpson began his career at the accounting firm Arthur Andersen, where he worked for several years before moving to the investment firm Capital Guardian Trust Company in Los Angeles.

GEICO’s Investment Success

In 1979, Simpson joined GEICO as an equity analyst. He quickly made his mark at the company, delivering exceptional returns by investing in high-quality companies at reasonable prices. Under his leadership, GEICO’s stock portfolio grew from $50 million to $6 billion over the course of three decades. Simpson’s investment approach was focused on fundamental analysis and a long-term investment horizon.

The Rise of Lou Simpson

Simpson’s success at GEICO did not go unnoticed. He became known as one of the best investors in the business, and his investment prowess earned him a place on the board of directors of Berkshire Hathaway. Over the years, he developed a reputation for being a thoughtful and skilled investor who was unafraid to take bold positions.

Simpson’s Investment Philosophy

Simpson’s investment philosophy was centered around a few key principles. He believed in investing in high-quality companies with strong competitive advantages, buying them at reasonable prices, and holding them for the long term. He was also a big believer in doing extensive research on companies before investing in them, and he was known for his deep understanding of the businesses he invested in.

From GEICO to Capital Operations

In 2010, Simpson retired from GEICO after more than three decades with the company. He then founded SQ Advisors, a private investment firm, and began managing his own money. Simpson’s investment success continued, as he delivered strong returns for his clients by following the same investment approach he used at GEICO.

The Move to Berkshire Hathaway

In addition to his work at SQ Advisors, Simpson was also asked to join the board of directors of Berkshire Hathaway in 2011. This was a natural fit, given his long-standing relationship with Warren Buffett and his deep understanding of the company’s investment philosophy. Simpson has been an active member of the board since joining, and his insights and expertise have been highly valued by Buffett and Munger.

Simpson’s Role on the Board

As a board member of Berkshire Hathaway, Simpson has played a key role in helping the company make investment decisions. He has also provided valuable insights on a range of business and financial issues, and has been an important advisor to Buffett and Munger. Simpson’s experience and wisdom have helped Berkshire Hathaway continue to deliver exceptional returns for its shareholders.

Simpson’s Investment Strategy at Berkshire

Simpson’s investment strategy at Berkshire Hathaway is similar to the one he used at GEICO and SQ Advisors. He focuses on investing in high-quality companies with strong competitive advantages, buying them at reasonable prices, and holding them for the long term. He is also an advocate for doing extensive research on companies before investing in them, and he is known for his deep understanding of the businesses he invests in.

Simpson’s Wisdom and Success

Lou Simpson’s success as an investor is due to his wisdom, discipline, and hard work. He has a deep understanding of business and a rigorous investment process that has enabled him to consistently deliver strong returns for his clients and shareholders. His investment approach is based on the fundamentals of buying high-quality businesses at reasonable prices, holding them for the long term, and doing extensive research before investing.

The Legacy of Lou Simpson

Lou Simpson’s legacy as an investor is one of excellence, integrity, and hard work. He has been an inspiration to countless investors and has helped shape the investment industry through his innovative thinking and disciplined approach. His legacy will continue to influence the investment world for years to come.

What We Can Learn from Lou Simpson

There are many lessons that investors can learn from Lou Simpson. Perhaps the most important is the importance of investing in high-quality businesses at reasonable prices. Simpson’s success has been built on his deep understanding of business and his ability to identify companies with strong competitive advantages. He has also shown the importance of doing extensive research before investing in a company and the value of holding investments for the long term.

Simpson’s Continued Influence on Investing

Even though Lou Simpson has retired from his role as chief investment officer of GEICO, his influence on the investment world continues to be felt. He continues to provide valuable insights and counsel to Berkshire Hathaway as a board member, and his investment approach has inspired a new generation of investors. His legacy will continue to shape the investment industry for many years to come.

Lou Simpson’s career is a testament to the power of hard work, discipline, and a deep understanding of business. He has created a lasting legacy as an investor, board member, and mentor to countless investors. His investment philosophy and approach to investing will continue to inspire investors for generations to come. Simpson’s story is a reminder that anyone can achieve success if they work hard, stay disciplined, and stay true to their principles.