Charlie Munger at Berkshire Hathaway’s annual meeting in Los Angeles, California. May 1, 2021.
Gerard Miller
As Charlie Munger’s admirers around the world mourn the loss of one of the most influential investors of all time, a deep sense of gratitude and appreciation has emerged for his unparalleled business acumen and uniquely sharp tongue.
Munger, the vice chairman of Berkshire Hathaway who died Tuesday, a month shy of his 100th birthday, left his mark on generations of investors in many ways thanks to his long and fruitful life.
First and foremost, Munger’s investment philosophy was applied to none other than Warren Buffett, creating the massive, nearly $800 billion conglomerate that Berkshire is today.
Early in her career, Munger broadened Buffett’s investment approach, eventually steering the younger Buffett away from buying dirt-cheap “cigar butt” companies that might still have a little smoke in them, and instead focusing on quality companies that sold at fair prices.
“As Berkshire shareholders, we certainly owe them a great debt of gratitude because the sooner you make a good decision, the better,” Bill Stone, chief investment officer at Glenview Trust, said in an interview. Such timing leads to a “complicated” effect, he said.
Recognize a good deal
Matt McLennan, co-head of the global value team and portfolio manager at First Eagle Investments, a longtime investor in Berkshire, recalled a meeting with Munger more than 15 years ago in which he asked how he and Buffett were making demands on their time spent making investment decisions in just a few minutes.
“Charlie answered ‘reading,’ which seemed quite fitting to me given his uncanny ability to create mental models of how the world works and to use those models as the basis for efficient decision-making,” McLennan told CNBC.
Munger has long emphasized the importance of recognizing a good company before it is widely perceived as such, and he has done so many times throughout his storied career.
He made a smart bet on Chinese electric car maker BYD, which turned out to be a big winner. Berkshire first bought BYD in 2008 and the stake has since grown into a billion-dollar position in the world’s largest electric vehicle maker.
Munger was also a loyal supporter of Costco Wholesale Corp. and called it one of the best investments of his life. He invested in the retailer before it merged with Price Club in 1993.
I never follow the crowd
Unlike Buffett, who often couched a criticism in a popular story, Munger tended to speak bluntly and punctuate his remarks with memorable jokes.
A long-time cryptocurrency skeptic, he minced no words in his criticism, saying digital currencies are a malicious combination of fraud and deception. He also called Bitcoin a “pile of shit,” “worthless, artificial gold,” and that trading digital tokens is “just dementia.”
As SPACs – special purpose acquisition companies – enjoyed a short-lived boom in 2021, Munger said: “It’s just that the investment banking profession will sell s— as long as s— can be sold.”
“What I really appreciated was that he was so direct,” said Stone of Glenview Trust. “It’s quite refreshing because most people in the world are forced to be a little careful about what they say or just want to be liked. There was something special about him and I never saw it as malicious.”
John Rogers, co-chief executive of Ariel Investments, respected Munger’s straightforward “disrespect” until the end.
“He was a real lateral thinker. He didn’t care what anyone else thought,” Rogers said at the CNBC CFO Council Summit this week. “I think to be a successful investor it is crucial not to follow the crowd. You think independently, and he was someone who really did that.”