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Louis Simpson, Warren Buffett's former stock picker, dies at 85

Dan Reichi

Louis Simpson, who helped pick stocks for famed investor Warren Buffett as part of a financial career that spanned more than 50 years, has died. He was 85.

He died in Chicago on Jan. 8 following a prolonged illness, according to Northwestern University in Illinois, where he had served as a trustee. He and his wife, Kimberly, were residents of Naples, Florida.

Louis "Lou" Simpson, who was chairman of SQ Advisors Llc, arrives for a morning session in Sun Valley, Idaho, on Wednesday, July 6, 2011.

Simpson spent more than three decades selecting equities for Geico, the auto insurer owned by Omaha, Nebraska-based Berkshire Hathaway. Buffett, Berkshire's billionaire CEO 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% since 1980, compared with 14% for the S&P 500 Index.

Simpson rose to president and CEO of Geico's capital operations from 1993 through 2010 and was once identified by Buffett as a candidate to succeed him in an emergency to oversee all of Berkshire's investments.

One of Simpson's successes came with the breakup of American Telephone & Telegraph in the 1980s. He invested about 40% 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, an athletic apparel maker, and CarMax, 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."

Simpson retired from Berkshire in 2010 and founded SQ Advisors with his wife, Kimberly Querrey, the following year. The firm, based in Naples, Florida, planned to manage money for Simpson's family and friends, as well as outside charities, Simpson said in an interview with Bloomberg News at the time.

"I did retire for a day," Simpson said in the interview. He then realized, "I would probably drive myself crazy and my wife crazy if I really retired and didn't do anything."

SQ Advisors held a stock portfolio valued at about $2.67 billion as of March 31, 2016, according to a filing. That included a Berkshire stake of more than $380 million.

Louis Allen Simpson was born in Chicago on Dec. 23, 1936, the son of Irving and Lillian Simpson, and grew up in nearby Highland Park.

He graduated from Ohio Wesleyan University in 1958, and earned a master's degree in economics from Princeton University, in New Jersey, two years later. He was an economics instructor at Princeton in 1961 and 1962 and sat on the board of the management company for the school's endowment from 2007 to 2013, according to the university.

Simpson was CEO of Western Asset Management in California before joining Geico, according to a 2010 Chicago Tribune article. While he was living in San Diego, he met Querrey, his second wife, on a business trip to Chicago. The couple lived in Chicago before moving to Florida upon his retirement from Geico.

He told the newspaper that his "eclectic" approach to investing required a lot of work.

"I try to read all company documents carefully," Simpson told the Tribune. "We try to talk to competitors. We try to find people more knowledgeable about the business than we are. We do not rely on Wall Street-generated research. We do our own research. We try to meet with top management."

Among their charitable giving, Simpson and Querrey donated $20 million to Princeton in June 2016 for a building to house international programs. They gave more than $100 million to Northwestern to encourage biomedical research.

During his years at Geico, Simpson avoided the spotlight even as his deft investment moves drew public praise from the most famous stock picker on the planet.

"I typically learn of Lou's transactions about ten days after the end of each month," Buffett said in his shareholders' letter in 2005. "Sometimes, it should be added, I silently disagree with his decisions. But he's usually right."

Survivors include his wife; three sons, Irving, Kenneth and Edward; plus four grandchildren and three great-grandchildren.