- Charlie Munger’s Daily Journal increased its Alibaba stake by 83% last quarter.
- Warren Buffett’s business partner first invested in the Chinese e-commerce group earlier this year.
- Alibaba’s US-listed shares have tumbled nearly 40% this year due to mounting regulatory threats.
- See more stories on Insider’s business page.
Warren Buffett advises investors to “be greedy when others are fearful.” Charlie Munger showcased that approach last quarter by doubling down on Alibaba stock while other shareholders rushed for the exit.
Munger is best known as Buffett’s business partner and Berkshire Hathaway’s vice-chairman. However, the 97-year-old has also been Daily Journal’s chairman since 1977, and manages the newspaper publisher and legal-software provider’s investment portfolio.
Daily Journal boosted its Alibaba stake by 83% to more than 300,000 shares in the third quarter, Securities and Exchange Commission filings show. It established a position in the Chinese e-commerce group in the first quarter of this year, marking the only addition to its US stock portfolio since at least the end of 2013, when it began disclosing its holdings.
Munger plowed $US40 ($AU55) million into Alibaba in the first quarter of this year, and probably invested another $US25 ($AU34) million or so last quarter, based on the stock’s average closing price in the period. However, Alibaba’s US-listed shares have plunged almost 40% this year due to the Chinese government’s crackdown on technology companies, meaning Daily Journal’s enlarged stake was worth only $US45 ($AU62) million at the end of September.
Daily Journal owned only nine stocks, worth a combined $US350 ($AU480) million with a $US80 ($AU110) million cost base, as of June 30 this year. It held four of those – Bank of America, Wells Fargo, US Bancorp, and South Korean steelmaker Posco – along with one other foreign stock and a sixth company’s bonds at the end of 2013, valuing its portfolio at $US151 ($AU207) million at the time.
Munger has mostly invested in American companies such as Coca-Cola and Costco throughout his career, making his wager on Alibaba somewhat surprising. However, he did bring BYD to Buffett’s attention, which led to Berkshire plowing about $US230 ($AU315) million into the Chinese electric-vehicle company in 2008. The conglomerate’s stake has skyrocketed 30-fold in value to about $US7 ($AU10) billion since then.