Warren Buffett Sells Remainder of Lou Simpson’s Holdings in Fourth Quarter of 2010
Berkshire Hathaway’s 13F filing with the SEC for the fourth quarter of 2010 revealed that Warren Buffett sold the remaining eight stocks that had previously been selected by Lou Simpson. These investments were part of the GEICO portfolio supervised by Lou Simpson until his retirement on December 31. The positions eliminated by Berkshire Hathaway totalled $1.3 billion and were in the following companies: Bank of America, Becton Dickenson, Comcast, Fiserv, Nalco Holding, Lowes Companies, Nestle, and Nike. The only position that Warren Buffett added to in the fourth quarter was Wells Fargo. An additional 6.2 million shares were purchased for about $200 million, representing a 1.8% increase in Berkshire’s stake in the company. Berkshire is currently the largest shareholder of Wells Fargo, owning 7% of its shares.
As of December 31, 2010 the top five holdings by market value of Berkshire Hathaway were:
(1) Coca-Cola ($13.2 billion)
(2) Wells Fargo ($10.6 billion)
(3) American Express ($6.5 billion)
(4) Procter & Gamble ($4.9 billion)
(5) Kraft Foods ($3.3 billion)
I am quoted in the following Bloomberg article (February 14, 2011) on this subject:
Berkshire Divests Stakes in Bank of America, Nike
“Any position that Buffett was uncomfortable holding on his own will have been sold in the fourth quarter” as Simpson left, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business.
Berkshire added to its Wells Fargo holding in the fourth quarter.
Last Updated: February 14, 2011 18:19 EST
The entire article is available at:
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a6PgKEmnVbbw
If Warren felt uncomfortable holding those assets after Simpson retired, why did he let Simpson own them while Simpson was in charge? It doesn’t make sense to deviate from a strategy just because of a planned change of leadership.
Warren Buffett delegated the responsibility of managing Geico’s investment portfolio to Lou Simpson. Simpson’s stock selections were his own and did not require Buffett’s approval. Since Lou Simpson has retired and is no longer available to manage Geico’s portfolio, and Warren Buffett did not choose Geico’s investments, Buffett has apparently decided to sell them. Also, since Buffett has recently hired Todd Combs to invest some of Berkshire Hathaway’s funds, perhaps the cash raised from the sale of Geico’s investments will be allocated to Combs so he could choose his own portfolio to manage.
@cookie
It makes perfect sense. The person who was studying and had the insight on these companies and their respective industries retired. Warren didn’t feel comfortable holding them without Lou’s guidance.