Lou Simpson's GEICO Portfolio

[scimonoce]

I just wrote an article that separates Lou Simpson's GEICO portfolio from Warren Buffett's portfolio:

 

http://www.gurufocus.com/news.php?id=105286

 

I thought this forum would be the best place to ask for feedback. Let me know what you think I misread in the 13F or got wrong with my math. I haven't seen other people do the same thing. So, although everything checked out against other sources, I'm curious why I haven't seen this done around the web more. And a little cautious it can't be this easy or every reporter would do it.

 

Thanks.

 

Here's the article: http://www.gurufocus.com/news.php?id=105286

And here's the 13F: http://www.sec.gov/Archives/edgar/data/1067983/000095012310078001/v56978ae13fvhr.txt

[twacowfca]

I just wrote an article that separates Lou Simpson's GEICO portfolio from Warren Buffett's portfolio:

 

http://www.gurufocus.com/news.php?id=105286

 

I thought this forum would be the best place to ask for feedback. Let me know what you think I misread in the 13F or got wrong with my math. I haven't seen other people do the same thing. So, although everything checked out against other sources, I'm curious why I haven't seen this done around the web more. And a little cautious it can't be this easy or every reporter would do it.

 

Thanks.

 

Here's the article: http://www.gurufocus.com/news.php?id=105286

And here's the 13F: http://www.sec.gov/Archives/edgar/data/1067983/000095012310078001/v56978ae13fvhr.txt

 

Robert Miles wrote an article and posted it on gurufocus a few months ago.  He outlined the methodology he used to separate out WEB's personal holdings from all the BRK holdings. Unfortunately, he was almost certainly wrong.  Apparently, he misidentified BRK's pension plan holdings which WEB had personally signed off on as being WEB's personal holdings.

 

However, the most interesting part, that no one commented on, was that Miles also identified a way to isolate Simpson's GEICO holdings, but he went no further and didn't list them.  Everyone trashed him for not admitting his mistake about WEB's holdings, but I think he may have been on to something about how to track Simpson's transactions and holdings through GEICO.  May I suggest reviewing his methodology to see if it matches the methodology you used.  :)  

 

Thank you for taking the time to do this.

[scimonoce]

Thanks.

 

I just separated everything that reported code 9,10, and 11 in column 7 of the 13F. #9 is "GEC Investment Managers" (which we know is Simpson), #10 is "GEICO Corp.", and #11 is "Government Employees Ins. Corp." The numbers always appear together. And the portfolio adds up to $4.4 billion. The Tribune article says it is a $4 billion equity portfolio that Simpson manages. I couldn't include Tesco, because GEICO and Berkshire own foreign shares in that case and so it isn't listed with 13F. Berkshire has disclosed Tesco (and Buffett mentioned both he and Simpson bought it separately), but I need a 13F to separate GEICO's holdings from Berkshire's.

 

Thanks for your advice. I read Miles approach after you mentioned it, and don't see any similarities. I think people may be right about the pension fund, as he seemed to be figuring out what Berkshire owned that its insurance companies didn't. In this case I just looked at what GEICO owned. Presumably, you could subtract GEICO's holdings from the 13F and be left with just those things Buffett bought.

 

I don't see any contradictions between the portfolio I came up with and anything Buffett or Simpson has been quoted as saying. And I do see places where the quotes confirm the portfolio I came up with. For example: Buffett has publicly said he never bought BofA, Simpson did.

[scimonoce]

I added a follow-up article that does a side-by-side comparison of Warren Buffett's portfolio and Lou Simpson's portfolio:

 

http://www.gurufocus.com/news.php?id=105365

 

Again, any corrections and feedback are appreciated.

[Myth465]

Thanks Geoff, also I really enjoyed the Borders series.

 

Regards,

 

 

[Ballinvarosig Investors]

Very good article, I have to say.

 

Did anyone else ever wonder why Bank of America and US Bancorp were in Buffett's portfolios? These two are not particularly good banks.

[Guest dealraker]

When I read the SEC docs on US Bancorp I am pretty damn impressed.

[treasurehunt]

Very good article, I have to say.

 

Did anyone else ever wonder why Bank of America and US Bancorp were in Buffett's portfolios? These two are not particularly good banks.

According to Geoff's analysis, US Bancorp is in Buffett's portfolio (as well as in Simpson's). Also, Buffett has spoken positively about USB; he thinks it's a pretty good bank.

[ExpectedValue]

Very good article, I have to say.

 

Did anyone else ever wonder why Bank of America and US Bancorp were in Buffett's portfolios? These two are not particularly good banks.

 

 

USB is a great bank. Whoever managed to buy it at its low during the financial crisis made out like a bandit. You have to remember that they have a really wonderful processing business that can help them out during financial downturns. It warrants a premium for them. They are also absolutely adored by the FDIC that relationship allowed them to get first pick on a string of wonderful FDIC takeovers of failed banks.

 

My view is that in 10 years we will see a string of bank rollups and the banking landscape will be one inhabited by a handful of large players. I see USB as being one of those consolidators and they will benefit immensely because of it.

[Ballinvarosig Investors]

I had my wires crossed on USB, sorry. Having said that though, there are things there that would concern me. I don't trust the loans that they took over from the FDIC and I don't feel there as well capitalised as they should be.

 

I still think BAC is a lemon though.

[benhacker]

I'm with Dealraker, USB is a fantastic bank... right up there with Wells... no doubt in my mind.

 

Ben

[wabuffo]

FWIW - you can also isolate Wesco holdings (ie, Munger).  

 

If you mark up the holdings that are keyed as "4, 3, 17, 19, 20, 21" - those are the WSC/Munger holdings.  I've verified this by adding up the market values and compared them with WSC's disclosures and they cross-check.  Basically Munger holds a concentrated portfolio at WSC of WFC, USB, KFT KO, PG, AXP, JNJ and GS warrants.

 

So there you go!  You can now update the article and show Simpson, Munger and Buffett side-by-side-by-side!

 

wabuffo

[ExpectedValue]

I had my wires crossed on USB, sorry. Having said that though, there are things there that would concern me. I don't trust the loans that they took over from the FDIC and I don't feel there as well capitalised as they should be.

 

I still think BAC is a lemon though.

 

Actually USB received some of the best lost sharing agreements with the FDIC.

Again, to understand USB you really need to focus on the processing business. Their loans aren't great but they can earn their way out of problems with the processing biz. They were one of the few banks to remain profitable during the financial crisis.

[DCG]

USB has been one of the best run banks in the country over the last decade or so.