How Charlie Munger's Portfolio of Three Concentrated Bets Has Weathered Two Years Since His Death

The Philosophy Behind Munger’s Unconventional Investment Approach

In 2017, Charlie Munger—the long-time intellectual partner of Warren Buffett at Berkshire Hathaway—challenged one of Wall Street’s most sacred principles. He dismissed diversification as a “rule for those who don’t know anything,” a stance that mirrored Buffett’s own conviction that spreading investments thin made “very little sense for anyone that knows what they’re doing.”

This wasn’t mere contrarianism. Before Munger’s decades-long collaboration with Buffett, he ran his own investment fund that delivered an extraordinary 19.5% average annual return from 1962 to 1975—nearly quadrupling the performance of the Dow Jones Industrial Average. When he passed away in November 2023, his legacy included a concentrated portfolio worth approximately $2.6 billion, nearly all of it deployed across just three strategic investments.

The Three Pillars of Munger’s Concentrated Wealth

Berkshire Hathaway: The Anchor Position

By far the largest component of Munger’s net worth, Berkshire Hathaway represented approximately 90% of his $2.6 billion wealth at the time of his death. He held 4,033 Class A shares valued at roughly $2.2 billion—a position that starkly reflected his unwavering conviction in Buffett’s enterprise.

The scale of this concentration becomes apparent when considering what could have been. Early records show Munger owned 18,829 Class A shares in 1996. Had he maintained that full position, his estate would have exceeded $10 billion. Instead, he had systematically sold or donated roughly three-quarters of his holdings over the decades, yet maintained a still-dominant stake in the company.

Since Munger’s passing two years ago, Berkshire Hathaway Class A shares have appreciated 37%, reflecting the market’s continued confidence in the conglomerate’s business model and management succession.

Costco Wholesale: A Retail Obsession

Munger’s relationship with Costco Wholesale extended far beyond mere shareholding. As a member of its board of directors for decades, he became what he himself described as “a total addict” of the warehouse retailer. In 2022, just before his death, he declared his love for “everything about Costco” and pledged never to sell a single share.

His conviction was backed by significant capital. At that time, Munger held over 187,000 shares worth $110 million, making him the second-largest individual shareholder. The investment thesis centered on Costco’s durable competitive advantages—what investors call “moats”—that insulate the company from competitive pressures regardless of economic conditions.

The subsequent two years have validated his enthusiasm. Costco shares have surged 47% since Munger’s passing. Beyond price appreciation, the company has signaled confidence through aggressive capital returns. Management raised the dividend by 27% and distributed a special dividend of $15 per share in January 2024, which alone yielded 2.3% for shareholders.

Himalaya Capital: Delegated to a Trusted Strategist

In the early 2000s, Munger took an unconventional step—he entrusted $88 million to Li Lu, the founder of Himalaya Capital. Li Lu earned recognition as “the Chinese Warren Buffett” for successfully transplanting value investing methodology to Chinese markets while adhering to the frameworks established by Buffett, Munger, and Benjamin Graham.

This delegation proved prescient. Munger himself publicly praised the returns as “ungodly,” indicating that his initial $88 million investment had compounded substantially. While Himalaya Capital operates as a private hedge fund and withholds detailed performance disclosures from public view, its concentrated holdings provide clues about returns.

The fund maintains Alphabet as a dominant position, with Class A and Class C shares comprising nearly 40% of assets under management as of the latest regulatory filing. Alphabet has soared 130% since Munger’s death. The fund also maintains a significant position in Berkshire Hathaway, which has appreciated in parallel with the parent company’s stock.

Evaluating Two Years of Performance

The investment landscape has shifted substantially in the two-plus years since Munger’s November 2023 passing. Broadly, the S&P 500 index has advanced 52% during this window—an extraordinary surge driven largely by artificial intelligence enthusiasm and mega-cap technology stocks.

Against this backdrop, Munger’s three concentrated positions have delivered respectable but not exceptional absolute returns:

• Berkshire Hathaway: 37% gain
• Costco Wholesale: 47% gain
• Himalaya Capital (inferred from top holdings): Double-digit gains in excess of 100% when accounting for Alphabet’s performance

Notably, both Berkshire and Costco have underperformed the broader market index by varying degrees. For many investors accustomed to chasing index returns, this might suggest weakness. Yet this interpretation misses a crucial dimension of Munger’s investment philosophy.

What Underperformance Obscures

Returns represent only one facet of investment quality. Munger’s three holdings share a critical characteristic: fortress-like business fundamentals combined with durable competitive advantages. These are precisely the kinds of enterprises that tend to provide downside protection while maintaining resilience across diverse economic environments.

During a period when value-oriented investments have struggled against the gravitational pull of speculative growth trades, the fact that Munger’s portfolio has delivered solid absolute returns at all speaks to the enduring power of his methodology. His concentrated bets on identifiable competitive moats—whether Costco’s membership model, Berkshire’s operational leverage, or Alphabet’s digital ecosystem dominance—have continued to compound wealth even as fashionable alternatives dominated headlines.

Two years after Charlie Munger’s death, his portfolio composition and subsequent performance validate a contrarian principle: for investors who genuinely understand their holdings, the path to outsized returns often runs through conviction and concentration, not diversification.