Charlie Munger (Trades, Portfolio)’s dry wit and keen mind are often used in service of Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) shareholders when he helps its chairman and CEO Warren Buffett (Trades, Portfolio) make investing decisions. The 95-year-old investor has more unilateral decision-making power over a portfolio elsewhere, however.
Munger is chairman of a California-based publishing company, Daily Journal Corp. (DJCO, Financial). There, along with the company’s vice chairman J.P. Guerin, he has a portfolio of six stocks. Four of the stocks were listed in the U.S. and, as of the end of the first quarter, were valued around $148 million: Wells Fargo & Co. (WFC, Financial), Bank of America Corp. (BAC, Financial), US Bancorp (USB, Financial) and POSCO (PKX, Financial). In its 2018 annual report, Daily Journal said that its marketable securities had an adjusted cost basis of around $53.89 million. As of March 31, 2019, they were worth about $192.15 million, for a gain of around 256.6%. They had generated for the company about $2.67 million in dividend income.
Munger addressed his application of unusually high portfolio concentration at his 2019 Daily Journal investor meeting:
“But the whole trick of the game is to have a few times when you know that something is better than average and to invest only where you have that extra knowledge,” Munger said. “And then if you get just a few opportunities that’s enough. What the hell do you care if you own three securities and JPMorgan Chase owns a hundred? What’s wrong with owning a few securities?”
Munger reportedly purchased the stocks in early 2009, at the lowest point of the financial crisis. Since Daily Journal began reporting the portfolio to the Securities and Exchange Commission after it reached the required $100 million value threshold, he has not traded a share of three of the stocks. He lowered his position in South Korea-based steel maker Posco during the fourth quarter of 2014 by 84.91%.
Year to date, three of the four stocks have gained in 2019.
Four buys
Wells Fargo & Co. (WFC, Financial)
Munger’s Daily Journal holds 1,591,800 shares of Wells Fargo & Co. The stock has risen 3.71% year to date, closing at $46.27 Monday. From its first-quarter 2009 average share price of $15.6, it has gained 196.6%.
Wells Fargo & Co. has a market cap of $207.95 billion, with a price-earnings ratio of 10.25 and price-sales ratio of 2.59. The trailing 12-month dividend yield of Wells Fargo & Co. is 3.8%. The forward dividend yield of Wells Fargo & Co. is 3.84%.
Bank of America Corp. (BAC, Financial)
Munger’s Daily Journal holds 2.3 million shares of Bank of America. The stock has gained 15.34% year to date, closing at $27.98 Monday. From its first-quarter 2009 average share price of $6.20, it has gained 351.3%.
Bank of America Corp. has a market cap of $266.04 billion, with a price-earnings ratio of 10.41 and price-sales ratio of 3.08. The trailing 12-month dividend yield of Bank of America Corp. is 2.14%. The forward dividend yield of Bank of America Corp. is 2.13%.
Munger’s Daily Journal holds 140,000 shares of US Bancorp. The stock has gained 15.16% year to date, closing at $52.30 per share. From its first-quarter 2009 average price of $14.60, it has gained 258.2%.
US Bancorp has a market cap of $83.26 billion, with a price-earnings ratio of 12.5 and price-sales ratio of 3.74. The trailing 12-month dividend yield of US Bancorp is 2.7%. The forward dividend yield of US Bancorp is 2.83%.
Munger’s Daily Journal holds 9,745 shares of Posco. The stock declined 4.28% year to date, closing at $52.63. From its first-quarter 2009 average price of $65.80, it has declined 25%. Munger reduced the position by 84.91% in the fourth quarter of 2014 when the price averaged $69.
Posco has a market cap of $18.48 billion, with a price-earnings ratio of 15.39 and price-sales ratio of 0.30. The trailing 12-month dividend yield of Posco is 4.37%. The forward dividend yield of Posco is 3.21%. Posco had an annual average earnings growth of 9.3% over the past five years.
See Charlie Munger (Trades, Portfolio)’s portfolio here.
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