Berkshire's Secret: Lou Simpson, The Only Other Investor Besides Buffett

Warren Buffett is the legendary investor who manages Berkshire Hathaway's portfolio.

But, did you know that there is one other person at the company who is authorized to invest?

That person is Lou Simpson, who will retire at the end of the year. Simpson manages Geico's investment portfolio (Geico is owned by Berkshire), while Buffett invests all the other Berkshire portfolios (after Simpson retires, Buffett will take over Geico also).

Since all Berkshire investments (including Geico's) are reported together, it can be hard to know which picks are Simpson's, and which are Buffett's. According to Buffett in a Chicago Tribune interview back in August, "If you see a purchase on a company in the $300 to $400 million range, odds are very good that's Lou's."

Simpson's and Buffett's investment styles are similar: value based - looking for "obscure companies poised for growth". They do their own research, talk to management / competitors, and read all company documents.

On a couple of occasions, they matched their investments. For example, they bought Tesco at the same time, and sold off Freddie Mac in 2003.

Simpson keeps things simple, and just employees one assistant and one analyst to manage a $4 billion portfolio. From 1980-2004, Simpson has only had 3 losing years, and beat the S&P 500 in 18 of those years.