Best known as Warren Buffett’s longtime business partner, Munger began accumulating equities in early 2009 at the Daily Journal. The portfolio was worth $112.3 million as of March 31, or about 65 percent of the Los Angeles-based publisher’s current market value. Investors who attend the company’s annual meetings said he signaled that Wells Fargo & Co. (WFC) was among the bets.
“Here’s a guy in his mid-80s at the time, sitting around with cash at the Daily Journal for a decade, and all of a sudden hits the bottom perfect,” said Steve Check, a Costa Mesa, Calif.-based investment manager who has attended the publisher’s meetings since 2004.
Munger’s involvement has drawn investors for years to the Daily Journal, which covers the law, business and real estate at its 10 newspapers and California Lawyer magazine. The 89-year-old helped Buffett build Berkshire Hathaway Inc. (BRK.A) from a failing textile maker into one of the world’s largest companies through stock picks and takeovers. The publisher’s transformation shows how Munger applied some of the same principles at a smaller venture, producing gains by buying when others were fearful.
The Daily Journal portfolio includes stocks in three Fortune 200 companies and a pair of foreign manufacturing firms, according to regulatory filings that don’t name the holdings. The publisher said it relies on the judgment and suggestions of Munger and Vice Chairman J.P. Guerin in managing the portfolio.
“Both of them will continue to play an important role in monitoring existing investments and selecting any future investments,” the company said.
Munger’s investments were disclosed in a May 2009 filing under the headline, “Liquidity and Capital Resources.” The section outlined how the publisher was sitting on about $9 million in gains after spending $15.5 million on common stocks.
The results kept getting better. Three months later, the Daily Journal said the holdings were valued at more than $41 million. By the end of September of that year, they appreciated to almost $48 million.
That caught the attention of Daily Journal observers, including Check, who began to speculate about what produced those results. There were plenty of possibilities. The Standard & Poor’s 500 Index touched its financial-crisis low in March 2009, then ended the year 23 percent higher than the 2008 close.
One guess was Wells Fargo, the biggest bank on the U.S. West Coast. It’s among the largest holdings at Berkshire, and Munger and Buffett, 82, frequently praised the San Francisco-based company.
The lender had plunged in early 2009 to as low as $7.80 after the housing slump deepened and competitors failed or were forced to sell themselves. Wells Fargo (WFC) rebounded that year as it emerged from the crisis with more market share after buying Wachovia Corp. It closed at $44.31 today in New York.
Continue reading here.