Charlie Munger Portfolio Performance: Analyzing the Strategies His Success

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Jacob Wolinsky
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The late Charlie Munger is known as a longtime friend and right-hand man of Warren Buffett. He rarely made media appearances and didn’t write any books, but he had made a major impact on investing and redefining value investing at its core.

Charlie Munger was known for his buy-and-hold investment strategy. His portfolio consisted of four holdings for more than a decade. He managed his portfolio and after 2008 decided to be the decision-maker in his fund Daily Journal.

Charlie Munger Portfolio: Personal

Charlie Munger’s strategy was to create a concentrated portfolio of holdings in businesses you trust. It doesn’t come as a surprise that both his portfolio and Daily Journal portfolio have only a handful of holdings. His portfolio consists of these holdings:

    • 4370 Berkshire Hathaway Inc Class A (NYSE:BRK.A)
    • 643 Berkshire Hathaway Inc Class B (NYSE:BRK.B)

50,000 Daily Journal Corporation (NASDAQ:DJCO)

  • 167,050 Costco shares (COST).

 

It is easy to see what was the focus of Munger’s investments. He was a crucial part of Berkshire Hathaway, while he served as a chairman in Daily Journal Corporation. Regarding Costco, he has been on the board of directors since 1997.

Daily Journal Corporation Stock Holdings

Alibaba Group Holding Ltd – ADR (NYSE:BABA)

Since 2013 Charlie Munger made only one change in the Daily Journal portfolio, by including Alibaba shares (HKG: 9988) in Q1 2021. By the end of the year, he quadrupled his investment. The owner of Alibaba, Jack Ma had issues with the Chinese government during 2022, which plummeted the stock value. Munger believed that Alibaba was a good company, but he decided to half this holding.

Currently, Daily Journal owns 300 thousand Alibaba shares valued at $23.5 million, and it takes 12.9% of the portfolio. When we look at the trading history of this holding we see that Munger was buying stocks when they were valued between $245 and $145, and decided to sell when the price fell to $115. Since then the price was still going down, to a current $78.

Bank of America Corp (NYSE:BAC)

Charlie Munger reported in 2013 that Daily Journal owns 2.3 million shares of Bank of America (NYSE: BAC), which takes 41.8% of the company’s portfolio. Since then he hasn’t increased or trimmed this holding. He bought the shares at $19.26 investing a total of $44.3 million. Today the value of stocks rose to $33.04 and the holding is valued at $76 million, generating a gain of 72%.

US Bancorp (NYSE:USB)

Another at least a decade-old holding that Charlie Munger didn’t touch since he bought the stocks. He invested $5.37 million into 140 thousand shares, and their current value only slightly increased. The price of stocks in that period rose from $38.36 to the current $40.10 resulting in a gain of 4.5%.

Wells Fargo & Co (NYSE:WFC)

Wells Fargo & Co (NYSE: WFC) is another company that Munger reported in a 13F filing in 2013. Like with others, he didn’t make any adjustments to this holding. He invested $68.8 million in 1.59 million shares. The stake is now valued at $76.9 million generating a gain of 12%.

Charlie Munger’s Investment Strategy and Philosophy

The core principles of Charlie Munger’s investment strategy and philosophy were concentrated in a value investing approach. He always searched for a way to invest below intrinsic value, and to do so he emphasized the importance of fundamental analysis.

He practiced buy-and-hold strategies. He also believed that an investor will rarely stumble upon a good investing opportunity, but once it does, he should take it right away. Also, he said on several occasions that the big money is not in selling and buying, but in waiting.

Munger believed that there are not so many good investing options and that a good investor should concentrate on his portfolio. He advocated for keeping the portfolio with no more than 10 holdings.

The thought behind it was that it is difficult to keep track of the fundamentals of a large number of companies. When you decide to invest you need to know as much valuable information about the business, and to be able to track its progress and performance.

Although he shared the majority of investing principles with Warren Buffett by the end of his investing career he made a crucial observation. Unlike other value investors who are looking to buy companies as cheaply as possible, Munger stated that he is willing to invest fair money into good businesses.

There we can find the one true core value of Munger’s investment approach – investing in fundamentally good companies. You need to get your stats in order, believe in a company, and be ready to wait out the investment to bear fruit.

In his long and fruitful investing career, he used his wide knowledge from different disciplines like psychology, biology, and history to analyze business. That helped him to avoid common biases that come when relying on emotions.

Charlie Munger’s Views on Cryptocurrencies

Charlie Munger expressed distrust and disapproval towards cryptocurrencies. He called Bitcoin trading disgusting and advised traders to avoid dealing with cryptocurrencies. He regarded cryptocurrencies as get-rich-quick schemes, and that there is no sound logic in their existence.

He also found it troubling that there was no way to track crypto, and how they are used. He feared that it could be used to fund terrorist groups, drug dealing, extortion, and kidnapping. Also, he pointed out that crypto do not have intrinsic value, they are not regulated by any laws, and their high volatility is causing a massive issue.

Take A Look At Charlie Munger On Crypto: It’s Ridiculous Anybody Would Buy This ‘massively Stupid’ Stuff:

FAQs

What Stocks Did Charlie Munger Own?

Charlie Munger had four stocks in his personal portfolio:

  • 4370 Berkshire Hathaway Class A shares
  • 643 Berkshire Hathaway Class B shares
  • 50,000 Daily Journal Corporation shares
  • 167050 Costco shares

Besides those, he managed Daily Journal Corporation whose portfolio has 4 holdings:

  • 300 thousand Alibaba shares
  • 1.59 million Wells Fargo & Co shares
  • 140 thousand US Bancorp shares
  • 2.3 million Bank of America shares

What Was Charlie Munger’s Famous Quote?

Charlie Munger had many famous quotes. These are just a couple that stand out the most:

  • Being rational is a moral imperative. You should never be stupider than you need to be.
  • It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities.
  • Knowing what you don’t know is more useful than being brilliant.
  • You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long, time.
  • There’s no way that you can live an adequate life without making many mistakes.

Final Thoughts

Charlie Munger had a major impact on the investing world mainly through his work in Berkshire Hathaway. His work with Warren Buffett also made an impact on Buffett’s investment journey.

What made Munger’s life and career fascinating was his curiosity in different disciplines, including physics, math, psychology, and history.

He didn’t write any books, but has left an unerasable impact on the new breed of investors through his speeches, where he shared his thoughtful insights about life, and how it reflects on investing. Poor Charlie’s Almanack is a collection of Munger’s writings and speeches which can prove to be an invaluable source of knowledge for every investor.

Munger through his work in Berkshire Hathaway and his personal investment portfolio emphasized his preference for long-term and concentrated portfolios. He wanted to know what he was investing in, and he was willing to pay a reasonable price for it. He made Buffett adjust his view on value investing, which can be seen still to this day.

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at)hedgefundalpha.com FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.