How Charlie Munger's Three Strategic Bets Have Fared Two Years After His Passing

The Philosophy Behind Concentration

When Charlie Munger, the vice chairman of Berkshire Hathaway, discussed his wealth allocation strategy at a 2017 conference, he made a striking declaration: diversification was merely “a rule for those who don’t know anything.” This wasn’t arrogance but rather a reflection of his decades-long track record. Before joining forces with Warren Buffett at Berkshire Hathaway (NYSE: BRK.A, BRK.B), Munger operated his own investment vehicle that delivered 19.5% annual returns from 1962 to 1975—nearly quadrupling the performance of the Dow Jones Industrial Average.

His wealth concentration strategy was equally striking: approximately $2.6 billion in net worth distributed across just three investments. This approach aligned perfectly with Buffett’s own investing philosophy, which emphasized that diversification made “very little sense for anyone that knows what they’re doing.”

Both investors sought companies with durable competitive advantages—what they termed “moats”—that could withstand market turbulence and thrive across economic cycles.

Performance Update: Where the Money Went

Since Munger’s death in November 2023, evaluating these three anchoring positions reveals how his investment principles have held up in current market conditions.

Costco Wholesale: The Decades-Long Love Affair

Munger’s relationship with Costco Wholesale (NASDAQ: COST) was personal and deeply held. Serving on the retailer’s board for decades, he frequently proclaimed himself “a total addict” of the company. In 2022, he stated he would “love everything about Costco” and pledged never to reduce his position. His shareholding at that time stood at over 187,000 shares, valued at approximately $110 million.

The intervening years validated his conviction. Since November 2023, Costco shares have climbed 47%, accompanied by a 27% dividend increase. Beyond regular payouts, the company distributed a $15-per-share special dividend in January 2024, generating an additional 2.3% yield for shareholders. These returns underscore Munger’s faith in the company’s operational excellence and pricing power.

Himalaya Capital: Delegating to a Master

In the early 2000s, Munger deployed $88 million to Li Lu, founder of Himalaya Capital, who earned recognition as “the Chinese Warren Buffett” for successfully implementing value investing principles across Asian markets. Himalaya Capital built its strategy on the foundational ideas championed by Buffett, Munger, and Benjamin Graham.

Munger’s trust proved warranted. He often referenced the fund’s “ungodly returns,” though as a private hedge fund, Himalaya Capital maintains confidentiality around specific performance metrics. However, its largest position—Alphabet (NASDAQ: GOOGL, GOOG)—represents roughly 40% of assets under management according to recent 13F filings. Since Munger’s passing, Alphabet has surged 130%, alongside solid appreciation in holdings like Berkshire Hathaway itself.

Berkshire Hathaway: The Overwhelming Majority

The most striking feature of Munger’s portfolio was his massive concentration in Berkshire Hathaway, which represented nearly 90% of his $2.6 billion fortune at the time of his death. This represents a notable departure from his earlier years: records show he held 18,829 Class A shares in 1996 but liquidated or donated roughly 75% of that position over subsequent decades. Had he retained his full 1996 stake, estimates suggest his net worth would have reached approximately $10 billion.

At his passing, Munger’s 4,033 Class A shares were valued around $2.2 billion. In the subsequent 25 months, Berkshire Hathaway Class A shares have appreciated 37%, reflecting both the company’s operational performance and Munger’s enduring influence on its strategic direction.

What the Market Has Shown

Tallying the returns across this trio paints an instructive picture. Berkshire Hathaway Class A shares have returned 38% since late November 2023, while Costco has delivered 47%. Both have trailed the S&P 500’s 52% surge, suggesting that even legendary investors’ portfolio selections don’t consistently outpace broad market indices in shorter timeframes.

Yet returns measured in percentage points tell only part of the story. The fundamental quality embedded in these businesses—durable competitive positioning, pricing leverage, and management discipline—carries different risk-adjusted properties than the wider market. Munger, known for his conservative temperament, likely valued stability and downside protection as much as maximum upside capture.

The durability of these investments even as value investing has experienced headwinds across recent years suggests that Munger’s core principles—buy quality businesses at reasonable prices, hold them indefinitely, and accept that outperformance may take time to materialize—remain structurally sound regardless of market cycles or macroeconomic fashions.