Warren Buffett's Partner, Charlie Munger, Put Almost All His Money Into 3 Investments: Here's How They're Doing Now

Charlie Munger concentrated nearly all of his ~$2.6 billion net worth in three positions: Costco, Himalaya Capital (via manager Li Lu), and Berkshire Hathaway. Since his November 2023 death, Costco shares are up ~47% and paid a $15 special dividend in January 2024 and raised its regular dividend by 27%; Berkshire Hathaway Class A shares have risen ~37–38%; Himalaya’s top holding Alphabet (≈40% of AUM per its last 13F) is up ~130% over the same period. While these holdings have delivered strong absolute returns, they have modestly lagged the S&P 500’s ~52% rise, underscoring the trade-off between concentrated, quality-focused investing and broader market exposure.

Analysis

Market structure: Concentration in high-moat large caps (GOOGL +130% since Nov‑2023; COST +47%; BRK.A/B +38%) benefits dominant platforms, carded retailers and insurance-capital models while pressuring low‑margin, non-membership retailers and small-cap consumer names. Costco’s membership model and Berkshire’s float/buyback optionality amplify pricing power and liquidity advantages; Himalaya’s GOOGL concentration increases systemic exposure to ad/capex cycles. Cross‑asset: equity inflows to these names tighten IG spreads, push USD stronger on risk‑on flows, and raise implied vols in large-tech (GOOGL/NVDA) while compressing vol for defensive names (BRK/COST).

Risk assessment: Tail risks include antitrust/regulatory action against Alphabet, a consumer recession hitting Costco’s discretionary basket, and a sharp equity drawdown that depletes Berkshire’s float (insurance loss shock). Immediate risks (days–weeks) are earnings/CPI prints and membership/advertising snapshots; short term (3–6 months) is ad revenue and consumer sentiment; long term (2–5 years) is moat durability vs. technological disruption. Hidden dependencies: Himalaya’s opaque concentration creates a lagged correlation spike to GOOGL; Berkshire’s performance is tied to insurance combined ratios and share‑repurchase cadence. Key catalysts: next 90 days of Costco membership metrics, Alphabet ad CPC trends, and Berkshire quarterly buyback disclosures.

Trade implications: Favor concentrated exposure with risk controls — BRK.B as a core multi‑year holding (2–3% portfolio) for insurance float + buybacks; use call spreads or LEAPS to access GOOGL upside while capping premium; treat COST as tactical long with pullback entry or income via covered calls. Pair trades: long COST vs short TGT/WMT to express membership moat; deploy protective puts or defined‑risk spreads ahead of CPI/Fed windows. Entry/exit: scale in over 30 days, add on 8–12% pullbacks, trim on 20–30% outperformance or adverse catalyst realizations.

Contrarian angles: Consensus praises Munger’s picks but underestimates crowding risk — GOOGL’s 130% gain implies asymmetric regulatory/valuation downside >30% in stress; BRK may be underowned by momentum managers and could rerate if buybacks accelerate (histor precedent 2008–2012 reratings). Costco’s multiple may already price peak moat expansion; a 10–20% downside on weakening comps is plausible. Unintended consequence: concentrated ownership among value managers can produce large simultaneous liquidity flows during drawdowns, amplifying moves; monitor membership renewal and ad CPC as high‑information leading indicators.

Key Decisions for Investors

• Establish a 2.5% portfolio long position in BRK.B as a core 2–5 year holding to capture insurance float and buyback optionality; add another 1% on any 10%+ pullback; trim the position by 30% of size after a 30% price gain or if Berkshire reports two consecutive quarters with insurance combined ratio >110%.
• Initiate a 1.5% directional position in GOOGL using Jan‑2028 LEAPS (≈30–40 delta) or a 6–9 month call spread to cap premium; hedge with a 10% OTM put if position grows >3% of portfolio, and reduce exposure to 0.5% within 30 days if material antitrust action is announced.
• Target a 1% tactical long in COST, but only deploy on a pullback ≥8–10% from today’s price; if no pullback, establish a 0.5% position and sell 30–60 day covered calls to generate incremental income, scaling out on any 20%+ upside.
• Implement a 0.5% long COST / 0.5% short TGT (or WMT) pair trade to express membership moat vs general retail for 3–6 months; exit the trade if the spread tightens by >10% or if Costco’s membership renewal rate falls below 90% (indicator check at next earnings).