Charlie Munger Handed Over His Family Fortune To The 'Chinese Warren Buffett' Who Flipped It into Half A Billion Dollars — 'We Made Unholy Good Return
During the beginning of the 21st century, Charlie Munger, the Vice Chairman of Berkshire Hathaway Inc., took a bold financial risk that involved a lot of careful consideration. He decided to entrust a large amount of his family's wealth, amounting to $88 million, to Li Lu. Li Lu has been compared to the legendary investor Warren Buffett and is popularly known as the "Chinese Warren Buffett."
Although it was a risky move, this brave investment not only stayed safe but also grew significantly. Its current estimated value is around $400 million.
Munger expressed that they had been generating excellent profits for a significantly extended period. He stated that their initial $88 million investment has enlarged by four to five-fold.
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They met for the first time at a friend's house in Los Angeles, right after Li graduated from college. Munger seemed a bit shy at first, lost in his own thoughts instead of actively participating in the conversation. But even so, he shared his deep and meaningful insights with Li, using very few words.
Munger and Li did not have a deep conversation until seven years after their initial meeting. This took place over Thanksgiving lunch in the year 2003. During this discussion, Li showcased his exceptional investment skills which left a strong impression on Munger. Munger was so impressed that he provided personal funds to support Li when he began a new fund venture in 2004.
Li has an impressive history of successful investments, one of which includes Kweichow Moutai - a liquor brand that has grown tremendously in worth in the last 20 years and is currently one of the largest companies listed in China. The liquor brand is so renowned that it has even been recognized as China's national alcoholic drink.
Even though the pandemic was happening, Kweichow Moutai had an exceptional year. In 2020, the value of their shares on the Shanghai Stock Exchange increased by approximately 70%. Kweichow Moutai is partly owned by the government and partly traded publicly, and it is China's most valuable company that is not in the technology sector. They are worth more than the country's top four banks.
Munger praised Li's smart choices, stating that he bought a significant amount of the stock at a low price compared to its earnings, and it paid off well for him.
Li's investment strategy relies on his talent for spotting undervalued prospects. He believes that unconventional investments can present the most opportunities for significant growth. Li's skill in identifying undervalued companies has enabled him to achieve exceptional value over time.
BYD Co. Ltd. is a well-known investment of Li. They are into the production of batteries and electric cars. Li started investing in BYD in 2002, which encouraged both Buffett and Munger to do the same six years down the line.
Munger recognized the incredible triumph and referred to the initial investment in BYD as a "wonder." When speaking with CNBC, he asserted that BYD has surpassed Tesla Inc. in China. This statement differs from what Buffett has said about the electric vehicle field, where he has been apprehensive about excessive rivalry.
Munger had great faith in Li and trusted him deeply with his finances. He believed that Li would eventually become an important figure at Berkshire Hathaway, and Li was the only outsider to receive such trust from Munger.
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Goldman Sachs has stated that investment portfolios that include real assets, such as art, have demonstrated greater performance over a lengthy period than the traditional 60/40 ratio.
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The piece titled "Charlie Munger Gave His Family's Wealth to the 'Warren Buffett of China' Who Turned It into a Fortune of $500 Million - 'We Achieved Amazing Returns for a Very Long Time'" was initially featured on Benzinga.com.
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