Charlie Munger’s Life History & Stock Portfolio: 4 Biggest Positions
In this piece, we will take a look at Charlie Munger's life history, his latest stock portfolio, and the biggest investment positions. If you want to skip our introduction to Mr. Munger's journey in life and the finance industry, then you can take a look at Charlie Munger's Life History & Stock Portfolio: 2 Biggest Positions.
Charlie Munger is one of the few financial professionals who also had a close association with the journalism industry. Out of the hundreds of hedge funds and investment companies covered by Insider Monkey, none of the well known investment bosses such as Ken Fisher of Fisher Investments, Ken Griffin of Citadel Investments, Cathie Woods of Ark Investment, or others are known for their newspapers. However, Mr. Munger's Daily Journal Corporation (NASDAQ:DJCO) is a full fledged media business with a century old history that Warren Buffett's close associate and friend bought in 1977.
As if owning a media company wasn't enough, Mr. Munger's relationship with Mr. Buffett also enabled him to view the investment world from the eyes of the world's biggest investment management company, Berkshire Hathaway. Berkshire is the most valuable financial firm in the world, and it owns billions of dollars of assets in the form of lucrative businesses, stocks, and other stakes that generate billions of dollars in profit each quarter without having the need to establish its own operations base. For instance, consider the fact that during the third quarter of this year, Berkshire Hathaway Inc. (NYSE:BRK-A raked in $63.4 billion in revenue, and during the previous quarter, its profit sat at $35.9 billion.
Now, compare this to Tesla, Inc. (NASDAQ:TSLA), Elon Musk's trillion dollar electric vehicle company that is one of the hottest growth stocks in the world. Tesla's revenue and profit during its latest fiscal year was $81.4 billion and $12.5 billion, showing that the investment behemoth that Mr. Buffett and Mr. Munger built over the course of decades can earn more in three months than a company whose cars travel in nearly every major market in the developed world.
In fact, Mr. Munger's relationship with Mr. Buffett is actually quite interlinked with Berkshire. The pair met in 1959, two years after an associate told Mr. Buffett that the reason he chose to entrust him with his money was because his trustworthiness reminded him of Mr. Munger's. By then, the now Oracle of Omaha was operating six investment partnerships and was yet to make some of his biggest and defining investment decisions. From there, the two would get to know each other for roughly the next two decades before Mr. Munger became the vice chairman of Berkshire, a position that he would continue to hold until his death today, on November 28th, 2023.
Naturally, operating in the big leagues with the greatest investors of our time provides one with a unique perspective. And when it came to Mr. Munger, he didn't hold back any punches. His publishing company provided him a platform un associated with Berkshire to share his unfiltered thoughts on current financial events and products, and two which came under his radar before resigning from the DJC's chairmanship were bitcoin and the well known Gamestop Corporation (NYSE:GME) short squeeze.
In fact, during a DJC annual meeting, Mr. Munger, who also ran his own financial corporation, Wesco Financial in the late 1900s, stated:
Well, certainly the great short squeeze in GameStop was wretched excess. Certainly, the bitcoin thing is wretched excess. I would argue that venture capital is throwing too much money, too fast, and there’s a considerable wretched excess in venture capital and other forms of private equity.
And so… We have a stock market which some people use like a gambling parlor. And the transactions of the people who love the gambling parlor aspect of the business and those who want to make long term investments, to take care of their old age and so forth…I mean, muddle that in one market and it goes out of control because the stock market becomes an ideal gambling parlor activity. I don’t think that ought to have been allowed, either. If I were the dictator of the world, I would have some kind of a tax on short term gains that made the stock market very much less liquid and drove out this marriage of gambling parlor and legitimate capital development of the country. It’s not a good marriage, and I think we need a divorce.
Quite a sharp critique of a market in an era when trades are carried out by algorithms and satellite internet is believed by many to have the potential to unlock sizeable catalysts in the finance industry by reducing the time that it takes for market signals to travel through submarine cables.
The similarities between Mr. Munger and Mr. Buffett are the sharpest when we compare Berkshire Hathaway and Munger's financial firm, Wesco Financial Corporation. Wesco is a Berkshire subsidiary and Munger became its CEO and chairman six years after he became Berkshire's vice chairman. At the time, Wesco was primarily a savings and loan association that helped every day folks meet their financial needs. However, the sector started to come under increased regulatory scrutiny in an era that is quite similar to what we've recently experienced. Back then, the Federal Reserve was aggressively raising interest rates as well, and these upended the fundamental business model of the 'thrifts' since they had to borrow expensive money only to have already lent it out at cheaper rates.
Mr. Munger's time at Wesco would see him 'sense' the impending doom for the savings and loans industry, and he would use Wesco's thrift subsidiary to invest in Federal National Mortgage Association (FNMA), or Fannie-Mae, to ride out the storm that hit the savings sector during the nine years between 1986 and 1995. Called the savings and loan crisis, this saw more than 30% of all thrifts in the U.S. wiped out, and thanks to Mr. Munger's business savvy, Wesco rode out the storm to exit the sector in 1992.
Finally, while Mr. Munger's association with Berkshire is often more widely covered, his business acumen also saw him rely on investing as a solid way to 'hedge' against downturns in the publishing industry. DJC has its own investment portfolio, and compared to most others, it invests in only a handful of stocks. Immediately after his passing, Mr. Buffett reminded everyone that Berkshire would not be where it is today without his friend, as he shared:
Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation.
Charlie Munger
Our Methodology
For our list of Charlie Munger's stock portfolio, we listed the Daily Journal Corporation's stock picks during Q3 2023.
Charlie Munger's Life History & Stock Portfolio: 4 Biggest Positions
4. U.S. Bancorp (NYSE:USB)
Daily Journal's Q3 2023 Investment: $4.6 million
U.S. Bancorp (NYSE:USB) is a classic Warren Buffett and Charlie Munger stock pick. A sizeable U.S. bank, it pays dividends and is nearly a century old. Like Buffett, Mr. Munger was also an adherent of the philosophy of buying the right stocks and then holding on to them for years. Insider Monkey's research shows that the Daily Journal owned U.S. Bancorp (NYSE:USB)'s shares as far back as 2016, when it held 140,000 shares that were worth $5.6 million. Since then, while the bank's stock has fallen by quite a bit, it has still managed to pay sizeable dividends.
Currently, U.S. Bancorp (NYSE:USB) pays a 42 cent dividend which provides it with a 5.18% annual yield. It is also quite a sizeable company, with roughly 75,000 employees and business divisions that range from wealth management to corporate banking and retail operations.
Insider Monkey also took a look at 910 hedge fund holdings for 2023's September quarter and found that 29 had bought and owned U.S. Bancorp (NYSE:USB)'s shares. While Mr. Munger's publication held a $4.6 million stake in the company back then, it was far from being the bank's biggest hedge fund investor. In fact, our research shows that the largest U.S. Bancorp (NYSE:USB) shareholder during the third quarter was Jean-Marie Eveillard's First Eagle Investment Management as it owned 8.9 million shares that were worth $295 million.
3. Alibaba Group Holding Limited (NYSE:BABA)
Daily Journal's Q3 2023 Investment: $26 million
Alibaba Group Holding Limited (NYSE:BABA) is one company where Mr. Buffett and Mr. Munger thought differently. This is because Mr. Buffett has only targeted one company that operates in Alibaba Group Holding Limited (NYSE:BABA)'s industry i.e. electronic commerce. This firm is Amazon.com, Inc. (NASDAQ:AMZN), and Warren Buffett first bought Amazon's shares in Q1 2019 as he stuck to his approach of going big and bought a massive $890 million stake courtesy of 9.6 million shares.
Mr. Munger however entered the eCommerce industry late. He first bought Alibaba Group Holding Limited (NYSE:BABA) in Q1 2021 by acquiring a more modest $37.4 million stake. Since then, the Daily Journal has trimmed its investments, and Munger's Alibaba Group Holding Limited (NYSE:BABA) investment also earned him his fair share of controversy after he held on to the shares for dear life despite troubles in China. To learn more about Munger's history with the company, you can read Charlie Munger’s Thoughts on China and His 5 Favorite Stock Picks.
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Disclosure: None. Charlie Munger's Life History & Stock Portfolio: 4 Biggest Positions is originally published on Insider Monkey.
