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WEB on selling Lou Simpson's portfolio


Liberty
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BECKY: OK, let's bring in another question. Robert from Potomac, Maryland, writes in--and this is something that a lot of people are confused on, so hopefully you can clear this up. But, "Why did you allow, I assume, the new manager to liquidate many of Lou Simpson's stocks? If they met your `forever' holding period criteria with Simpson, why sell? Simpson's record is long-term proven. The new manager has no record long enough to show a similar competency or that his results are just luck. These stock sales are inconsistent with your forever holding period advice." So maybe you could clarify what's really happening there.

 

BUFFETT: Yeah. Well, we buy--when I say I, I buy stocks with the idea I'd be happy holding them forever. We don't end up owning them forever, obviously, in many cases, because you find something else that's more attractive and--or sometimes managements change and who knows what. But Lou Simpson was managing his own portfolio. He managed it for 21 years, did a sensational job. But when he said he was going to leave in June, he and I both decided he was going to liquidate his portfolio between then and the end of the year. In other words, I never inherit any investment decision from somebody else. If Charlie Munger made me a gift of 100 shares of some stock, I would sell it then--and then--I would then decide whether I wanted to buy it again myself. But I do not believe in default-type decisions on investments. So when Lou left, his portfolio left. When a new man comes in, his portfolio comes in.

 

BECKY: And the two aren't related.

 

BUFFETT: They're not related at all. Lou had maybe 15 or so stocks, generally in the 3- to $400 million range, and he just sold them proportionally throughout the rest of the year. He wasn't going to be managing them anymore, and I knew they were probably good companies, but I didn't want to buy them myself. And there's no reason, if I don't want to buy them myself, I should tell the next manager at Berkshire--of GEICO to manage them. Todd is going to be responsible for his decisions, and--just as Lou was when he was there. And I want it to be Todd's portfolio.

 

Source: http://www.cnbc.com/id/41877271/

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