Geico's Top Market Strategist Churning Out Profits; Lou Simpson's Stock Rises on His Successful Ideas
It was Good Friday, the stock market was closed, and the man who manages a $2 billion portfolio of securities from his Chevy Chase office was happy. Free from phone calls and other interruptions related to the financial markets, Louis A. Simpson sat in his Geico Corp. office and read 15 annual reports.</br></br>Simpson's good days have turned into good years since he joined Geico as the insurance company's chief stock market strategist in 1979. For the past seven years, Simpson's ability to pick stocks for Geico has placed him in the top tier of money managers nationwide.</br></br>Simpson says there is no mystery to his stock market magic. A voracious reader, the 50-year-old vice chairman of Geico searches daily newspapers, magazines, annual reports and newsletters for clues that might spark investment ideas. His four-member investment team uses computer screens to identify stocks that, on the basis of financial data, appear to be bargains.</br></br>But there is more to Simpson's research than crunching, or analyzing, numbers and combing periodicals. After identifying a stock for a possible purchase, Simpson or a member of his staff will attempt to arrange a meeting with that company's senior management. Because of the large blocks of stock that Simpson can buy for Geico, management often complies with such requests.</br></br>Simpson's reputation as a long-term investor, rather than a short-term trader, also helps him gain access to management. If management refuses to meet, Simpson typically will not buy the stock. Once he makes a commitment, Simpson expects meetings with the company's management to continue as long as Geico owns its stake.