Charlie Munger's $2.6 Billion Portfolio Reveals His Three Core Convictions—and How They've Performed Since His Passing

A Concentrated Bet: Why Charlie Munger Rejected Diversification

Charlie Munger, Warren Buffett’s legendary partner at Berkshire Hathaway, held a contrarian view that would make most financial advisors cringe. He famously dismissed diversification as “a rule for those who don’t know anything,” a philosophy that directly mirrored Buffett’s assertion that diversification makes “very little sense for anyone that knows what they’re doing.”

This wasn’t bravado. Before joining Berkshire, Munger ran his own investment fund that averaged 19.5% annual returns from 1962 to 1975—nearly quadrupling the Dow Jones Industrial Average’s performance over the same period. His track record gave him the credibility to concentrate his bets, and he did exactly that. By the time of his death in November 2023, nearly his entire $2.6 billion net worth was locked into three investments, each chosen for what Munger called “moats”—sustainable competitive advantages that insulate companies from market disruption.

The Three Pillars of Munger’s Investment Strategy

Costco Wholesale: The Long-Term Devotion

For decades, Munger served on Costco’s board and became perhaps the company’s most devoted shareholder. In 2022, he declared himself “a total addict” of the business and promised never to sell a share. His conviction was backed by substantial capital: over 187,000 shares valued at approximately $110 million at that time.

Two years after Munger’s passing, his faith in Costco appears well-founded. The stock has appreciated 47%, while the company simultaneously boosted its dividend by 27% and delivered a $15-per-share special dividend in January 2024—equivalent to a 2.3% yield for shareholders on record. This combination of capital appreciation and income generation exemplifies the type of “wonderful business at a fair price” that Munger ultimately favored over bargain hunting.

Himalaya Capital: Delegated Expertise in Value Investing

In the early 2000s, Munger made an unconventional decision: he entrusted $88 million to Li Lu, a hedge fund manager celebrated as “the Chinese Warren Buffett” for his success applying value investing principles across Asian markets. Himalaya Capital, the fund Li established, built its strategy on the same philosophical foundations as Munger and Buffett—seeking undervalued companies with durable competitive advantages.

Munger’s trust proved justified. Although Himalaya operates as a private hedge fund without public performance disclosures, its largest holdings paint a revealing picture. Alphabet (Google) comprised nearly 40% of the fund’s assets under management and has surged 130% since Munger’s death. Beyond Alphabet, Himalaya maintains a significant position in Berkshire Hathaway, which has also delivered solid returns during the same period.

Berkshire Hathaway: The Cornerstone Position

Munger’s relationship with Berkshire Hathaway represents perhaps the most striking aspect of his portfolio concentration. Approximately 90% of his net worth—roughly $2.2 billion in Berkshire Class A shares—was held in the parent company itself. This wasn’t always the case; records show that Munger sold or donated approximately 75% of the 18,829 Class A shares he owned in 1996. Had he maintained that original position, his net worth would have exceeded $10 billion.

Since his passing, Berkshire Class A shares have delivered a 37% total return, reinforcing his long-term thesis about the company’s resilience and evolution. Buffett himself credited Munger with transforming Berkshire’s investment approach from obsessive value hunting toward acquiring “wonderful businesses at fair prices”—a framework that continues to guide the conglomerate’s decisions today.

Performance in Context: What the Data Reveals

Across the two years and one month following Munger’s death, his concentrated portfolio delivered mixed signals relative to broader markets. Berkshire returned 38% while Costco climbed 47%—both solid performances that nonetheless trailed the S&P 500’s 52% gain. Himalaya Capital’s returns remain opaque, though its equity holdings suggest double-digit performance at minimum.

Yet this apparent underperformance masks a critical reality: Munger’s three holdings exhibit fundamentally different risk characteristics than the overall market. These are mature businesses with pricing power, fortress balance sheets, and predictable cash flows—precisely the traits that appealed to a disciplined, capital-preservation-focused investor like Munger.

The Enduring Lesson: Conviction Over Consensus

Munger’s three-pillar investment strategy embodies a philosophy increasingly rare in modern finance: the belief that deep knowledge justifies concentrated positions, and that “wonderful businesses” warrant patient capital allocation regardless of short-term market cycles. Two years after his passing, his holdings continue to perform respectably despite a market environment where value investing has been decidedly out of favor.

The real message isn’t whether Costco, Himalaya, and Berkshire perfectly matched the market during this period. Rather, it’s that Munger’s disciplined approach to identifying durable competitive advantages and aligning capital with conviction remains a timeless blueprint for investors willing to think independently and act with patience.