Warren Buffett and Lou Simpson Are Bullish On These Stocks

Lou Simpson, a former understudy of Warren Buffett, is the manager of SQ Advisors. Simpson has enjoyed great success running GEICO, returning an average of 24% annually. Following the takeover of GEICO by Berkshire Hathaway, Simpson stayed to work under Buffett managing approximately $4 billion worth of stock investments. In 2011 he started his own fund, SQ Advisors, managing to raise approximately $1.3 billion. Like his former boss, Simpson is an advocate for value investing, basing his decisions on his own research and analysis of the company and industry in question.

hedge funds vs. mutual funds

The similarities between the two great investors can be seen in their current stock holdings as well. Both Berkshire Hathaway and SQ Advisors hold impressive stakes in companies like Wells Fargo & Co (NYSE:WFC) and Moody’s Corporation (NYSE:MCO). Let us have a closer look at Simpson’s top stock picks!

Top dog is United Parcel Service, Inc. (NYSE:UPS). During the fourth quarter of 2013, Simpson has increased his fund’s position by 8%. SQ now holds 2.37 million shares worth approximately $250 million. United Parcel Service has a market cap of $89 billion and pays an annual dividend of $2.53 which represents a yield of 2.6%. The stock is traded at a Price to Earnings (P/E) ratio of 21.06, well below the industry average of 51.30. For the fourth quarter of 2013, UPS posted revenues of $14.9 billion and earnings per share (EPS) of $1.25. For the current quarter, the market expects UPS to register revenues of $13.9 billion and EPS of $1.13.

Simpson is also bullish on Wells Fargo & Co (NYSE:WFC), which is Warren Buffett’s biggest position at the moment. According to SQ Advisors’ latest 13F report, Simpson has increased his investment by 10% to 4.8 million shares, valued at $218 million. Following the massive fall in the price of the stock generated by the 2008 financial crisis, Wells Fargo has been constantly advancing to a current price of $47.08 per share. The company has a market cap of $247 billion and pays an annual dividend of $1.20 – a yield of 2.6%. Wells Fargo posted revenues of $21.7 billion and earnings of $1 per diluted share for the three months ending December 31, 2013. Revenue and EPS are expected to fall during the current quarter to $20.6 billion and $0.96 respectively.

Next up is Moody’s Corporation (NYSE:MCO). Simpson has made only a minor adjustment, adding around 600 shares during the last quarter, while Buffett has decreased his exposure by 1%. SQ now holds a little over 2 million shares worth around $157 million. Moody’s Corporation has also been in an uptrend since the credit crunch and is currently traded at approximately $82 per share. The company has a market cap of $17.49 billion and pays an annual dividend of $0.98, which represents a yield of 1.20%. The company’s latest financial report revealed revenues of $779 million and EPS of $0.94 for Q4 of 2013. It is expected to replicate the same performance in the current quarter, with the market predicting revenues of $772 million and earnings of $0.92 per share.

Simpson has high hopes for U.S. Bancorp (NYSE:USB) as well. During the fourth quarter of last year, SQ Advisors doubled its position to 3.89 million shares valued at $157 million. The company has a market cap of $75.8 billion and pays an annual dividend of $0.89. The stock trades at a trailing P/E ratio of 13.xx, basically in line with the industry average. For the last quarter of 2013, U.S. Bancorp posted revenues of $5.22 billion and earnings per diluted share of $0.76. Analysts expect the company to register revenues of $4.82 billion and EPS of $0.73 for the three months of 2014.

Last but not least is DIRECTV (NASDAQ:DTV). Simpson has almost halved his fund’s stake in the company to 1.66 million shares worth approximately $115 million. However, Berkshire The company has a market cap of $39.7 billion and does not pay a dividend. The stock trades at a P/E ratio of 15.06 and has a beta of 1.13. For the three months ending December 31, 2013, DIRECTV posted revenues of $8.6 billion and earnings of $1.53 per diluted share. Expectations for the current quarter are as follows: revenues of $7.9 billion and EPS of $1.52.

Disclosure: none.

Recommended reading:

Becker Drapkin Management Increases Its Holding of Cascade Microtech, Inc. (CSCD)

Kevin Kotler’s Broadfin Capital Reports New Stake In MELA Sciences Inc (MELA)

Springbok Capital’s Top Picks: General Motors Company (GM) and Constellium NV (CSTM)

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!