Charlie Munger handed $88 million to Li Lu when the value investor launched a new fund in 2004.
Warren Buffett’s right-hand man says he’s made four or five times his money since then.
Munger also discusses BYD and another of Li’s best stock picks in a new interview.
Charlie Munger handed nearly $90 million of his family’s fortune to Li Lu in the early 2000s. The value investor, whom Munger has dubbed the “Chinese Warren Buffett,” has grown the sum to roughly $400 million since then.
“We made unholy good returns for a long, long time,” Munger told the Financial Times for a new profile of Li. “That $88 million has become four or five times that.”
Munger, 99, is Buffett’s business partner and Berkshire Hathaway’s vice-chair. He met Li at a Thanksgiving lunch in 2003 and was so impressed that when Li launched a new fund in 2004, Munger backed him with his own money, the FT reported.
Li’s winning bets include Kweichow Moutai, a distilled-liquor brand that has skyrocketed in value over the past two decades and now ranks among China’s largest listed companies.
“It was real cheap, four to five times earnings,” Munger said. “And Li Lu just backed up the truck, bought all he could and made a killing.”
However, Li’s most famous stock pick is undoubtedly BYD. He invested in the battery- and electric-vehicle maker in 2002, paving the way for Buffett and Munger to purchase their own stake six years later. The wager has been one of Berkshire’s best performers in the past 15 years.
“It worked so well, the early investment in BYD was a minor miracle,” Munger told the newspaper.
The nonagenarian investor also reflected on Li’s history as a student protester at Tiananmen Square.
“Li Lu is no longer a revolutionary,” Munger said. “He’s a capitalist. You can’t find a more capitalistic capitalist than Li Lu.”
Buffett, Munger, and Li go way back. For example, Li decided to pursue an investing career after listening to Buffett lecture at Columbia University in 1993.
Munger has said that Li is the only outsider he’s ever trusted with his money and once predicted Li would eventually take a leading role at Berkshire.
Moreover, Li moved his Himalaya Capital Management firm from New York to California to be closer to Munger before stationing it in lower-taxed Washington state in 2018. He’s also structured his office like a mini-Berkshire, with teams of analysts digging into a select few companies and sharing their findings directly with him, the FT reported.
Himalaya held $306 million of Berkshire stock at the end of June, Securities and Exchange Commission filings show. Buffett’s company was one of just a few positions in its $1.8 billion US stock portfolio, along with Alphabet, East West Bancorp, and two of Berkshire’s flagship holdings: Apple and Bank of America.
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