• The Daily Journal Corporation’s portfolio has changed little over the years
• A relationship of trust with the managing directors of the companies is central
• Investments designed for the long term
According to Charlie Munger, the best investment strategy is as follows: “It’s better to make a few big bets and then sit back and wait. Mathematically speaking, there are many advantages to doing nothing here. Or, to put it more vividly, if you make a few bought great companies, then you can safely sit on your butt,” he was quoted as saying by private banking magazin. Warren Buffett’s longtime business partner has since stepped down as chairman of his company, the Daily Journal Corporation, but still serves on the board.
A look at the portfolio of the Daily Journal Corporation in the first quarter of 2023 also shows consistency: with assets under management of USD 160.982 million, the total value of the investments has fallen sharply due to market conditions, but the positions in the Munger depot have remained unchanged (as of March 31, 2023). March 2023). These are holdings in US Bancorp (with 140,000 shares), Amazon competitor Alibaba (with 300,000 shares), Wells Fargo (with 1,591,800 shares) and Bank of America. Munger has held the 2,300,000 shares in Bank of America since 2013 without adjustment.
The most important investments of his life
The most valuable investments of his life, however, were others – in an interview with the Financial Times, Berkshire Hathaway vice president Charlie Munger said he’d only really made money from four investments in his life: Berkshire Hathaway, Costco, a fund of Li Lu’s Himalaya Capital and Afton Properties.
Berkshire Hathaway: Charlie Munger has presided over the Berkshire Hathaway conglomerate since 1978 alongside Warren Buffett. Because of their many similarities, Charlie Munger has often been referred to as Warren Buffett’s “alter ego.” The two asset managers are linked by a friendship that has lasted for decades and is said to have started over lunch in 1959.
The success of Berkshire Hathaway remains unbroken: In the last quarter, the company had sales of 85.39 billion US dollars, which corresponds to an increase of 20.59 percent compared to the same quarter last year. An integral part of the long-term strategy is the dividend gains in the Berkshire Hathaway portfolio to hedge against inflation. For example, according to Dow Jones calculations, Warren Buffett personally earns around 5.7 billion US dollars a year with his Berkshire shares just from dividends.
Costco stock: Charlie Munger has served on the board of retailer Costco since 1997. At the Daily Journal shareholders’ meeting in February this year, Munger said, “I love everything about Costco. I’m totally hooked and will never sell a stock,” according to yahoo finance!. At a previous shareholder meeting, he said he wished the US could function as well as Costco. While Berkshire Hathaway divested itself of its Costco holdings in 2020, Munger retained his personal interest and held 196,095 Costco shares as of November last year. This makes him the largest single shareholder after CEO Craig Jelinek. The Costco boss described Munger to yahoo finance!, partly because of his almost legendary quick-wittedness and his photographic memory as a great asset to the group.
Costco recently fell short of expectations in terms of sales and quarterly profit and was able to increase sales by 2 percent to 53.65 billion US dollars compared to the previous year’s result.
However, the analysts on TipRanks are optimistic for the consumer goods group: 19 analysts put the stock on “buy” and 7 on “hold”. Costco also ranks among Morgan Stanley’s “30 stocks for 2025.” The analysts see long-term competitive advantages and good returns.
Himalaya Capital and Afton Properties: Executive Personalities
Li Lu’s Himalayan Capital: Seattle-based investor Li Lu follows the value investing principles of investor legends Warren Buffett and Charlie Munger with his fund Himalaya Capital. He is not concentrating on the USA, but on the Asian market – mainly China. The investment strategy focuses on companies with great growth potential and trustworthy management. For years, Li Lu was seen as a potential successor to Buffett and Munger at Berkshire Hathaway, and his fund is one of Munger’s core investments.
Among the holdings of Himalaya Capital are about H-Shares of the world market leader in railway equipment CRRC. The fund also invests in Tencent. The Chinese Tencent app is considered a “super app” that combines the functions of Facebook, WhatsApp, Netflix, Uber and PayPal. But there are also large holdings in East West Bancorp and Bank of America in the portfolio.
Afton Properties: Afton Properties has built a real estate portfolio valued at around $1.2 billion over the past few years and, most notably, last year added more residential units in California than any other company. According to The Straits Time, neither Afton Properties managing directors Avi Mayer and Reuven Gradon nor Charlie Munger have announced the size of the star investor’s stake in the massive real estate portfolio. It is known that Munger invested in the company of the young Avi Mayer, whom he met by chance, more than 15 years ago. Today, the company has become a real estate force, aggressively buying up apartment buildings in California – according to media reports, investors are even willing to pay cash for apartment complexes.
Currently, however, Charlie Munger sees the investment environment as increasingly difficult. A diversified portfolio is no longer a “surefire tactic”. Therefore, Munger advises young investors to take a closer look, since the days when annual returns averaging 10 percent could be achieved with long-term investments are over.
Editorial office finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
– on my own behalf –
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