The investment philosophy of the late Charlie Munger was famously rooted in patience and rationality, yet his most lucrative move involved a level of trust that few Western financiers would ever contemplate. Munger, the longtime vice chairman of Berkshire Hathaway, made the unconventional decision to hand over a significant portion of his personal family wealth to Li Lu, a Chinese-born investor often described as the Chinese Warren Buffett. This partnership, built on mutual intellectual respect, eventually turned an initial stake into a staggering 400 million dollar fortune.
Li Lu first caught Munger’s attention not just through his sharp analytical mind, but through his personal history. As a survivor of the Tiananmen Square protests who later moved to the United States, Li possessed a unique perspective on the nascent Chinese market that Munger found invaluable. While Munger was known for his skepticism of speculative bubbles, he saw in Li a kindred spirit who understood the nuances of long-term value investing in a rapidly shifting global economy. This was not merely a professional referral; it was a total endorsement of Li’s ability to navigate the complexities of Asian markets.
The results of this collaboration were described by Munger himself in his characteristic blunt style. He noted that the returns generated by Li Lu were unholy in their magnitude, consistently outperforming traditional benchmarks and even some of Berkshire’s own historical metrics. The strategy was centered on identifying high-quality Chinese companies during their early growth phases and holding them with unwavering conviction. By applying the Graham-and-Doddsville principles of value investing to the high-growth environment of China, Li managed to capture upside that many Wall Street firms missed due to regulatory fears or lack of cultural insight.
One of the most notable successes stemming from this partnership was the investment in BYD, the Chinese electric vehicle and battery manufacturer. It was Li Lu who originally brought the company to the attention of Munger and Buffett. Despite initial skepticism from the broader market regarding the viability of Chinese automotive technology, Munger trusted Li’s boots-on-the-ground assessment. The subsequent explosion in BYD’s valuation became a cornerstone of both Munger’s personal wealth and Berkshire Hathaway’s portfolio, proving that the synergy between Western capital and Eastern market expertise could produce historic gains.
Beyond the financial metrics, the relationship between Munger and Li Lu represented a bridge between two different eras of finance. Munger, who often lamented the decline of traditional American manufacturing, saw in China a reflection of the industrial vigor that once defined the United States. Li Lu provided the intellectual framework to capitalize on that transition. For the Munger family, the decision to outsource their financial future to an outsider was a gamble that defied conventional wisdom, yet it remains one of the most successful examples of capital allocation in modern history.
As the financial world reflects on Charlie Munger’s legacy following his passing, the story of his partnership with Li Lu serves as a final lesson in the power of open-mindedness. Munger was never a man to be swayed by popular opinion or geopolitical posturing. He followed the logic of the balance sheet and the character of the manager. In Li Lu, he found a manager who not only protected his family’s capital but multiplied it with a ferocity that few others could match. This 400 million dollar success story stands as a testament to the idea that true value knows no borders and that the best investment one can make is often in the talent of another person.
