Charlie Munger's Portfolio

GuruFocus.com

Charlie Munger (Trades, Portfolio), Warren Buffett (Trades, Portfolio)'s trusted partner at Berkshire Hathaway (BRK.A)(BRK.B) and endless well of investing wisdom, also manages a small portfolio for and sits on the board of a small company called Daily Journal Corp. (DJCO). The company publishes a daily paper, a monthly booklet and provides online resources for attorneys and legal professionals in California and Arizona, for an annual fee.

Munger is known for influencing his friend Buffett away from investing in degenerating "cigar-butt" companies and toward long-term investments in high-quality companies. In 2009, he began investing some of the Daily Journal's funds into common stocks of companies hard hit by the financial crisis. In the few years since, the stocks have advanced and Daily Journal's stock price has almost quadrupled.

Many signs indicate Daily Journal itself is a high-quality company. In the past 10 years, its book value per share flourished at a 34.3% rate, and in the past five years at a 29% rate.

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As of the latest quarterly filing, his Daily Journal portfolio contains just four stocks, 95.8% weighted in the financial sector and valued at $119 million. The stocks are POSCO (PKX), U.S. Bancorp (USB), Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC).

Wells Fargo (WFC)

The largest holding of Munger, Wells Fargo, is also the largest holding of Berkshire Hathaway, representing 60.8% of the portfolio, with 1,591,800 shares.

In the past five years, Wells Fargo's stock has gained approximately 140%, and trades around $45.97 a share on Tuesday.

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Wells Fargo & Co. has a market cap of $242.15 billion; its shares were traded with a P/E ratio of 12.0 and P/S ratio of 2.90. The dividend yield of Wells Fargo & Co. stocks is 2.60%. Wells Fargo & Co. had an annual average earnings growth of 3.70% over the past 10 years.

Bank of America Corp. (BAC)

Munger also holds 2.3 million shares of Bank of America Corp., accounting for 30.2% of the portfolio.

Bank of America's share price over the past five years has surged by about 175%, to trade around $16.88 on Tuesday.

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Bank of America Corporation, through its banking and various non-banking subsidiaries throughout the U.S. and in selected international markets provides a diversified range of banking and non-banking financial services and products through five business segments: Deposits, Card Services, Consumer Real Estate Services, Global Commercial Banking, Global Banking & Markets, Global Wealth & Investment Management.

Bank of America Corporation has a market cap of $180.04 billion; its shares were traded with a P/E ratio of 25.60 and P/S ratio of 2.20. The dividend yield of Bank of America Corporation stocks is 0.20%.

U.S. Bancorp (USB)

Munger holds 140,000 shares of U.S. Bancorp, which represents 4.8% of the Daily Journal portfolio. The company is also the eight largest portfolio position for Berkshire Hathaway.

In five years, U.S. Bancorp's price appreciated 149%, to Monday's $40.29 per share.

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U.S. Bancorp was incorporated in Delaware in 1929. It is a multi-state financial services holding company headquartered in Minneapolis, Minn. U.S. Bancorp has a market cap of $73.58 billion; its shares were traded with a P/E ratio of 13.70 and P/S ratio of 3.80. The dividend yield of U.S. Bancorp stocks is 2.20%. U.S. Bancorp had an annual average earnings growth of 1.20% over the past 10 years.

POSCO (PKX)

The only non-financial and non-U.S. stock in the Daily Journal portfolio, Munger owns 64,600 shares of POSCO, worth 4.2% of the portfolio.

Over the past five years, POSCO's stock lost 9%, trading around $68.01 per share on Tuesday - near a five-year low.

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Korea-based POSCO is a steel company with a $21.16 billion market cap. It has experienced 11.6% annual five-year EBITDA growth and 15.2% five-year revenue growth. Its P/B has fallen to near a 10-year low at 0.53, and P/S ratio to near a two-year low at 0.36. Its P/E is 14.2, and it carries a dividend yield of 2.5%.

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This article first appeared on GuruFocus.

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