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October, 2000


What would you call someone who manages over $2 billion, is a value investor, beat Warren Buffett's record last year, achieved a 22.8% compound annual return from '79 to '96 (when his company was last publicly traded), has a more concentrated portfolio of investments (9) than Berkshire Hathaway (28), (in contrast to Buffett) sometimes does invest in bargain technology companies, and has an excellent chance to be the successor to the famous investor from Omaha? "Forbes," Oct. 30, 2000, in "The Next Warren Buffett," pages 378-380, calls him Louis A. Simpson, the chief investment officer of GEICO, which was purchased as a wholly owned subsidiary of Berkshire Hathaway in 1996. Simpson has remained, after that transition, still in control of GEICO's portfolio. Regardless of what you think of GEICO, Simpson's 21-year investment record is matched by few if any (other than Warren Buffett himself) in the money management world. As "Forbes" points out, with Warren Buffett now 70 and having recently had surgery for colon polyps, the question of Berkshire Hathaway succession is not irrelevant. To have been, at least unofficially, given the nod by the country's most famous and successful value investor is no small accolade in itself. It means to us that the investment selections of Mr. Simpson may be worth serious consideration. Here, according to "Forbes," are the majority five of GEICO's portfolio assets with the lowest price-to-earnings ratios, per trailing 12 months P/E data (provided by A. M. Best and "Forbes"):

CompanyStock SymbolRecent PriceP/E
First DataFDC4513
GATXGMT41 11/1614
Great Lakes ChemicalGLK28 11/1612
Jones ApparelJNY27 1/414
U.S. BancorpUSB21 15/1611


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

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