How Charlie Munger Concentrated His $2.6 Billion Into Three Investments That Are Reshaping Modern Portfolios

Munger’s Contrarian View on Diversification

Charlie Munger, the late vice chairman of Berkshire Hathaway, fundamentally rejected the conventional wisdom of diversification. At a 2017 conference, he disclosed that almost his entire family fortune—approximately $2.6 billion—was concentrated in just three investments. For Munger, diversification wasn’t a mark of sophisticated investing; rather, he branded it a strategy “for those who don’t know anything.” His partner Warren Buffett echoed this conviction, suggesting that broad diversification “makes very little sense for anyone that knows what they’re doing.”

This philosophy wasn’t born from overconfidence. Before joining Berkshire Hathaway, Munger operated his own investment fund that delivered an astounding 19.5% average annual return from 1962 to 1975—nearly four times the performance of the Dow Jones Industrial Average. His track record demonstrated that deep industry knowledge, rigorous analysis, and conviction could outpace the market substantially.

Concentration Over Chaos: Munger’s Three Core Bets

When Munger passed away in November 2023, he left behind a masterclass in portfolio construction. Unlike many investors who chase diversification across dozens of holdings, Munger’s strategy centered on identifying companies with durable competitive advantages—what investors call “moats.” These structural advantages allowed his chosen businesses to maintain profitability and growth across varying economic cycles. Let’s examine how these three concentrated bets have performed since his death.

The Retail Powerhouse: Costco Wholesale

For decades, Munger served on the board of Costco Wholesale, a position that gave him intimate knowledge of the company’s operations. His enthusiasm was unguarded—he openly called himself “a total addict” of Costco and declared in 2022 that he would never sell a single share. At that time, his position encompassed over 187,000 shares valued at approximately $110 million, making him the company’s second-largest shareholder.

The post-Munger performance of Costco has been remarkable. Since November 2023, the stock has delivered a 47% return to shareholders. Beyond price appreciation, the company demonstrated commitment to shareholder returns by increasing its dividend by 27% during this period. Additionally, Costco distributed a special dividend of $15 per share in January 2024, which alone represented a 2.3% yield for shareholders—a tangible recognition of the company’s financial strength.

Private Market Excellence: Himalaya Capital

In the early 2000s, Munger entrusted $88 million to Li Lu, a fund manager regarded as “the Chinese Warren Buffett” for his masterful application of value investing principles across Asian markets. Li Lu established Himalaya Capital based on the value investing frameworks pioneered by Buffett, Munger, and Benjamin Graham. Munger’s confidence proved justified—his initial allocation multiplied substantially, prompting Munger himself to describe the returns as “ungodly.”

As a private hedge fund, Himalaya Capital maintains limited public disclosure of its returns. However, examining its largest holdings provides illuminating clues. Alphabet, which represents nearly 40% of the fund’s assets under management according to the most recent 13F filing, has surged 130% since Munger’s death. Berkshire Hathaway, another primary holding, also contributed solid gains during this period. These results suggest Himalaya Capital has maintained its strong performance trajectory.

The Core Position: Berkshire Hathaway

Perhaps most revealing is that Munger’s stake in Berkshire Hathaway represented roughly 90% of his net worth at the time of his death. By November 2023, he owned 4,033 Class A shares valued at approximately $2.2 billion. This substantial concentration reflected his ultimate confidence in the company he helped architect.

Interestingly, this $2.2 billion position would have been dramatically larger had Munger maintained his earlier holdings. Records from 1996 show he owned 18,829 Class A shares. However, Munger sold or donated approximately 75% of that stake over the intervening decades. Had he retained those original shares, his net worth would have approached an estimated $10 billion—a testament to Berkshire’s long-term wealth creation.

Since Munger’s passing, Berkshire Hathaway Class A shares have gained 37%, reflecting the company’s continued resilience and market leadership.

The Verdict: Philosophy Versus Performance Metrics

In the twenty-five months following Charlie Munger’s death, his three core investments have delivered mixed results relative to broader market indices. Berkshire Hathaway Class A shares returned 38%, while Costco appreciated 47%. Both substantially outpaced their respective sector averages, yet they underperformed the S&P 500’s 52% gain during the same period. Himalaya Capital’s exact returns remain opaque, though its major holdings suggest strong double-digit performance.

On a purely numerical basis, Munger’s concentrated portfolio hasn’t matched the index. However, this comparison overlooks a crucial distinction. The businesses Munger selected possess exceptional fundamentals and pricing power—characteristics that typically translate to lower volatility and more predictable returns than the broader market. For a conservative investor like Munger, these companies offered something more valuable than raw performance maximization: durable wealth preservation alongside growth.

What emerges most striking is that Munger’s value investing philosophy continues generating competitive returns even during a period when value strategies have faced substantial headwinds. Market cycles favor different approaches—momentum and growth often dominate during bull markets—yet Munger’s concentrated holdings in quality businesses have demonstrated the enduring relevance of his principles. Two decades into the 21st century, the timeless wisdom underlying Charlie Munger’s investment approach remains vindicated.