“I drove the truck back and committed murder.”

In the early 2000s, Charlie Munger – Warren Buffett's long-time business partner – made an unexpected decision. He handed over nearly $90 million of his family's fortune to a 38-year-old investor named Li Lu.

At the time, Li was a rising star in the investment world and was often referred to as the “Chinese Warren Buffett.” What followed was remarkable. This initial investment was approximately $400 million, which shows how successful this decision was.

Don't miss:

Li Lu, the founder of Himalaya Capital, had a reputation for applying Ben Graham's value investing principles, similar to Munger and Buffett. Instead of focusing on the crowded American market, Li turned his attention to Chinese stocks where he saw huge potential. Munger once remarked, “We've had unholy returns for a long, long time,” reflecting on the success of his decision to entrust Li with his family's fortune. Munger noted that the initial investment of $88 million has increased four or five times.

Trend: The global gaming market is expected to generate $272 billion by the end of the year – At $0.55/share, this VC-backed startup with a user base of over 7 million investors offers easy access to this asset market.

One of Li's most notable moves was his early investment in Kweichow Moutai, a brand of distilled spirits that became China's national drink after the Communist Revolution. Li realized its potential when the company was trading cheaply at just four to five times its earnings. He went all out and bought as many shares as possible – a decision that paid off hugely as Moutai became one of China's largest publicly traded companies. In a Financial Times article, Munger praised Li's foresight: “He just bet backwards, bought everything he could and made a killing.”

Li's relationship with Munger goes beyond just money management. At a Daily Journal Corporation meeting in 2019, Munger reflected on how rare it was to trust an outsider with your money, saying, “I’m 95 years old. I gave Munger money to an outsider to run for office once every 95 years. That is.” Li Lu. Munger saw something unique in Li: a combination of strategic thinking and the ability to seize opportunities that others might miss.

See also: This Adobe-backed AI marketing startup grew from a $5 million valuation to $85 million in just three years by working with brands like L'Oréal, Hasbro, and Sweetgreen – learn more about the $1,000 investment today -dollars for just $0.50 per share.

The story continues

Li's investment journey has not been without challenges. He fled China after the Tiananmen Square protests and eventually found refuge in the United States, where he earned a degree from Columbia University. His early struggles shaped his investment philosophy, but what set him apart was his ability to turn adversity into opportunity. Despite the obstacles, Li built Himalaya Capital into one of the most successful China-focused investment funds headquartered in Seattle.

Li often praised Munger's mindset, saying that Munger never seemed pessimistic or defeated even in the face of challenges. He admired Munger's ability to remain rational and calm, embodying the Chinese proverb: “One should neither rejoice in external gains nor be saddened by personal losses.”

Trend: These five entrepreneurs are worth $223 billion – They all believe in a platform that offers a target return of 7-9% with monthly dividends

Under Munger's guidance, Li reorganized his fund and eliminated many of the shortcomings typical of hedge funds. This allowed him to focus on long-term investments without the constant pressure of having to show monthly returns. From 2004 to 2009, Li's fund achieved an annual compound growth rate of 36%; Within 12 years the capital grew more than twenty-fold.

The partnership between Charlie Munger and Li Lu is a prime example of what can happen when trust and shared values ​​come together in investing. Munger's decision to entrust a significant portion of his family fortune to Li Lu, who is an “outsider” by most standards, may have seemed like a gamble to some, but it turned out to be a brilliant move. Their collaboration underscores that true success goes beyond just crunching numbers – it's about a long-term vision and trusting the right person to steer the ship.

Read more:

Next up: Transform your trading with Benzinga Edge's unique market trading ideas and tools. Click now to get unique insights This can give you an edge in today's competitive market.

Get the latest stock analysis from Benzinga?

This article Charlie Munger gave his family fortune to the “Chinese Warren Buffett” – he turned it into $400 million: “Backed Up The Truck And Made A Killing” originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.