In this article, we discuss the 10 biggest positions in the Charlie Munger stock portfolio. If you want to skip our detailed analysis of these stocks, go directly to Charlie Munger Stock Portfolio: 5 Biggest Positions.
Charlie Munger is a name in the finance world that is often associated with Warren Buffett, one of the most successful investors of all-time. However, the success of Buffett over the years, according to his own admission, has been in large part due to the advice and help of Munger. A six-decade long ongoing friendship turned into a business relationship in 1978. Munger owns Daily Journal Corporation, a publishing and technology company by core interest that has an impressive stock portfolio as well.
Munger thrives on a value investing strategy that places an emphasis on quality over quantity. The portfolio of Daily Journal Corporation consists of just five stocks. It is close to $225 million in value and comprises largely of finance companies. In recent months, Munger has invited controversy in the media with long tirades about the development of Bitcoin, the most popular cryptocurrency. At a meeting earlier this year, he termed Bitcoin “contrary to the interests of civilization” and also termed new developments in the crypto world “disgusting”.
Some of the biggest positions to consider based on the stock portfolio of Charlie Munger over the years include Berkshire Hathaway Inc. (NYSE:BRK-B), Costco Wholesale Corporation (NASDAQ:COST), and American Express Company (NYSE:AXP), among others discussed in detail below. Munger still sits on the board of Costco even though Buffett has exited. Investors eager to explore his portfolio in detail should check out some of the top holdings in Daily Journal Corporation, which are all discussed below.
Charlie Munger
Our Methodology
Here is our list of the 10 biggest positions in the Charlie Munger stock portfolio. Five of these are from the investment portfolio of Daily Journal Corporation. The rest were picked from the investment history of Munger and his associates, as well as the comments made by the investor over the past few years.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Charlie Munger Stock Portfolio: Biggest Positions
10. POSCO (NYSE:PKX)
Number of Hedge Fund Holders: 12
POSCO (NYSE:PKX) is a Korean firm that makes and sells steel products. At the end of the second quarter of 2021, Daily Journal Corporation owned more than 9,000 shares in the company worth $748,000, representing 0.35% of the portfolio. POSCO recently made an offer to purchase Senex Energy, an Australian oil producer, and a deal is in the works. In July, POSCO had announced that it expected a 1,300% surge in operating profits during the second quarter.
In early July, POSCO (NYSE:PKX) had announced that it had signed an MoU with Rio Tinto to explore and develop new technologies that will help lower the carbon emissions in the steel value chain across the globe.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in POSCO (NYSE:PKX) with 992,644 shares worth more than $76 million.
Just like Berkshire Hathaway Inc. (NYSE:BRK-B), Costco Wholesale Corporation (NASDAQ:COST), and American Express Company (NYSE:AXP), POSCO (NYSE:PKX) is one of the stocks on the radar of elite investors.
9. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 41
Daily Journal Corporation, at the end of June this year, owned 140,000 shares of U.S. Bancorp (NYSE:USB) worth close to $8 million, representing 3.74% of the portfolio. The holding is one of the smallest in the portfolio. US Bancorp operates as a financial services holding firm and was founded in 1863. It employs over 70,000 people. The stock is exactly the kind of stable offering that value investors love to hold. The business fundamentals of the firm are strong. It recently beat market expectations on earnings per share and revenue.
On October 15, investment advisory RBC Capital reiterated an Outperform rating on U.S. Bancorp (NYSE:USB) stock and raised the price target to $66 from $62, noting that the core business of the firm was driving industry-leading profitability.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $8.30 billion in U.S. Bancorp (NYSE: USB), down from 43 the preceding quarter worth $8.33 billion.
In addition to Berkshire Hathaway Inc. (NYSE:BRK-B), Costco Wholesale Corporation (NASDAQ:COST), and American Express Company (NYSE:AXP), U.S. Bancorp (NYSE: USB) is one of the stocks that hedge funds are buying.
In its Q4 2020 investor letter, Mairs & Power, an asset management firm, highlighted a few stocks and U.S. Bancorp (NYSE:USB) was one of them. Here is what the fund said:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
8. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 87
Bank of America Corporation (NYSE:BAC) is the largest holding of Daily Journal Corporation. At the end of June, the investment firm owned 2.3 million shares in the bank worth over $94 million, representing nearly 44.5% of the portfolio. Munger invested in the bank at the height of the 2009 financial crisis when the S&P 500 had bottomed and investors were fleeing the stock market. Munger made use of the time and purchased a stake in the bank at an absolute bargain price. The gamble has paid off handsomely for the investor.
Wells Fargo analyst Mike Mayo recently raised the price target on Bank of America Corporation (NYSE:BAC) stock to $60 from $55 and maintained an Overweight rating, noting the tech-driven gains around the business in recent months.
At the end of the first quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46 billion in Bank of America Corporation (NYSE:BAC), down from 97 in the previous quarter worth $45 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
7. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 94
Wells Fargo & Company (NYSE:WFC) is another large holding of Daily Journal Corporation. Even though Buffett has been slashing his stake in the company over the past few months, Munger hasn’t followed suit. Filings from the end of June indicate that his investment firm owned over 1.5 million shares in the bank worth $72 million, representing 33% of the overall portfolio. The holding remained unchanged from the one in the previous quarter.
Wells Fargo & Company (NYSE:WFC) has been rebuilding the mobile application for customers and has introduced a new virtual assistant feature in the revamped version. More than 27 million users of the bank will have access to the app.
At the end of the second quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $7 billion in Wells Fargo & Company (NYSE:WFC), down from 96 in the previous quarter worth $7.4 billion.
Berkshire Hathaway Inc. (NYSE:BRK-B), Costco Wholesale Corporation (NASDAQ:COST), and American Express Company (NYSE:AXP) are some of the top stocks to buy now, just like Wells Fargo & Company (NYSE:WFC).
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Wells Fargo & Company (NYSE:WFC) was one of them. Here is what the fund said:
“Detractors to performance relative to the index include financial services holdings such as Wells Fargo. While banks in general have suffered due to the recession and experienced credit losses, Wells Fargo also suffered from operational missteps. It is our expectation, however, that our bank holdings in general will benefit from stronger economic growth as the pandemic recedes; and we believe Wells Fargo in particular, will, over time, lower their costs and successfully grow their businesses.”
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 146
Even as a government crackdown results in a pullback in share prices of dual listed Chinese stocks like Alibaba Group Holding Limited (NYSE:BABA), Munger, who made headlines for saying that Chinese firms were stronger than American ones in terms of global clout, has doubled down on his bet on Alibaba. Regulatory filings from the end of June this year reveal that Daily Journal Corporation owned over 165,000 shares in the company worth $37.4 million, representing 17.59% of the portfolio.
Alibaba Group Holding Limited (NYSE:BABA) founder Jack Ma, who had not been seen in public since October 2020, appeared for the first time while meeting business associates in Hong Kong last month, laying to rest rumors about his arrest.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA) with 14 million shares worth more than $3.2 billion.
Berkshire Hathaway Inc. (NYSE:BRK-B), Costco Wholesale Corporation (NASDAQ:COST), and American Express Company (NYSE:AXP) are some of the elite stocks to buy now, alongside Alibaba Group Holding Limited (NYSE:BABA).
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
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Disclosure. None. Charlie Munger Stock Portfolio: 10 Biggest Positions is originally published on Insider Monkey.
