Charlie Munger's legacy in investment strategy shines through in his final portfolio update for the Daily Journal. Over 15 years, Munger, acclaimed as Warren Buffett's key collaborator and the vice-chairman of Berkshire Hathaway, amplified Daily Journal's stock portfolio from a nascent stage to an impressive $300 million.
This final update from his tenure highlights Munger's steadfast commitment to patience, discipline, and strong conviction in his investment choices.
Munger's tenure as chairman of Daily Journal's board spanned nearly half a century, from 1977 until his passing at 99 in November. Notably, during the 2008 financial crisis, Munger boldly directed the company's funds into the stock market, taking the helm of its investment management.
The first portfolio report of Daily Journal emerged in the last quarter of 2013, likely triggered when its holdings surpassed the $100 million mark. The portfolio then comprised substantial stakes in Bank of America, Wells Fargo, US Bancorp, and South Korean steel giant Posco.
A decade later, Munger's steadfast approach was evident. The holdings in Bank of America, Wells Fargo, and US Bancorp remained unchanged. Although the stake in Posco was reduced significantly in 2014, it remained untouched until the end of 2022 when it was completely divested.
Munger's strategy was characterized by minimal yet impactful changes. In 2021, he placed a significant bet on Alibaba, only to revise his stance later by reducing the investment, a rare admission of miscalculation in his typically unswerving investment philosophy.
However, Munger's conservative approach wasn't uniformly successful. The investments in Wells Fargo and US Bancorp, for instance, grew less than 10% over a decade, lagging behind the S&P 500's 150% surge in the same period. In contrast, the Bank of America investment fared better, growing nearly 120%.
One of Munger's most notable successes was an early investment in Chinese electric vehicle manufacturer BYD. This decision contributed significantly to Daily Journal's $138 million in unrealized gains as of September 30 and a staggering 15-fold return on an initial $3.3 million investment by late 2021.
Daily Journal's investment records are a testament to Munger's investment ethos: a focus on concentrated bets, long-term holding, purchasing at attractive prices, infrequent selling, and a resistance to unnecessary adjustments or reactions to market fluctuations. His strategy involved minimal alterations to the company's U.S. holdings over a decade, with the addition of one asset, the exit of another, and the maintenance of three core positions, illustrating his disciplined and focused approach to investing.
