Conviction is easy to talk about. It’s harder to wire.
Then-Berkshire Hathaway Vice Chairman Charlie Munger didn’t just praise talent — he backed it with tens of millions of dollars from his own family fortune.
The recipient? Li Lu, the investor Munger later referred to in a 2023 Financial Times profile as the “Chinese Warren Buffett.”
Munger, who passed away in 2023 at age 99, met Li at a Thanksgiving dinner in 2003. What struck him wasn’t Li’s dramatic backstory — fleeing China after the 1989 Tiananmen Square protests, earning degrees at Columbia, launching his own firm. It was something simpler.
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“I’m not interested in revolution. I’m a capitalist,” Munger told FT. “It was his capitalist aptitude that attracted me.”
That aptitude would soon be tested.
Long-Term Thinking, Very Real Results
When Li launched a new fund under Himalaya Capital in 2004, Munger entrusted him with $88 million to manage, urging him to stick to long-term value investing rather than short-term trading.
The outcome? By 2023, that investment had grown roughly four- to fivefold.
“We made unholy good returns for a long, long time,” Munger said in the same FT profile. “That $88 million has become four or five times that.”
At the 2018 Daily Journal annual meeting, where he served as chairman, Munger was blunt about how rare this kind of trust was for him. “In my life, I’ve given money to one outside manager, and that’s Li Lu,” he said. “No others in my whole life. And I have no feelings that it would be easy to find a second.”
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That’s not hype. That’s Munger drawing a very hard line.
At that same meeting, he explained why Li stood out. “The first rule in fishing has always been fish where the fish are… and Li Lu just went where the fishing was good.” In other words, while most investors were crowding into heavily analyzed U.S. markets, Li focused on China, where opportunities were bigger and competition was thinner.
That philosophy showed up clearly in two defining investments.
One was an early bet on Kweichow Moutai, purchased when the stock traded at just four to five times earnings. Munger joked that Li “backed up the truck” and bought aggressively — a move that turned into one of the most celebrated consumer investments in Asia.
Another defining call was BYD.
Li invested in the company in 2002, when it was still primarily a battery maker. That conviction later influenced Berkshire’s $230 million purchase of a 10% stake in 2008. Munger has acknowledged he wasn’t initially enthusiastic about the auto industry.
“I didn’t like the auto business,” he told FT. “But it worked so well, the early investment in BYD was a minor miracle.”
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BYD would go on to become the world’s largest electric vehicle producer by sales — a result that validated Li’s long-term thesis in dramatic fashion.
For Munger, the decision wasn’t about geography or headlines. It was about judgment. He believed Li thought independently. He believed he had discipline. And he believed he’d stay rational when others wouldn’t.
In a Facebook tribute after Munger’s death, Li later described him as the “enlightened embodiment of modern-day Confucianism,” a reflection of the moral framework Munger believed should underpin capitalism.
Strip it down, and the story is straightforward.
Charlie Munger saw rare investing talent. He trusted it early. And he let it compound.
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