Recently, the Daily Journal (DJCO.US), a subsidiary of Charlie Munger, disclosed the 13-F file for the third quarter of this year (simply understood as the third quarterly report).
Daily Journal is an American legal newspaper group. Since 1977, Munger has served as Chairman of the Board of Directors of Daily Journal. This company has nothing to do with Buffett and is Munger’s home field.
According to the document disclosure, since July this year, Munger has substantially increased its positions in a Chinese concept stock giant, and the number of positions held has increased from 165,300 shares at the end of the second quarter to 302,000 shares, an increase of 82%.
Last year, the Chinese concept stock was suspended due to the A-share listing of its subsidiary company (another financial giant), which caused a huge shock.
This year, the company suffered another regulatory storm and was cast aside by countless domestic retail investors.
This is Munger’s second bargain hunting of the Chinese concept stocks.
The first dip was in the first quarter of this year. At the end of the quarter, DJCO held 165,300 shares. At the end of the second quarter, the shareholding information remained unchanged. At the end of the third quarter, DJCO held 302,000 shares.
Some overseas analysts speculated that because the valuation of the Chinese concept stock had fallen to the level of “utility stocks”, Munger was very excited and made a heavy bet.
However, the stock did not stop falling because of Munger’s purchase.
After the first dip, Munger’s largest floating loss or nearly 40%. After the second dip to dilute the cost, Munger may still be at a loss.
After all, as of now (October 8, 2021), the company has fallen 30% this year. Munger, who is over 90 years old, has also been ridiculed as “the old man of Lianpo”. Is Munger still able to eat?
Time will give the answer.
02
Coincidentally, when everyone is afraid, many famous investors are also “buying more and more falling.”
According to information from the Hong Kong Stock Exchange, on September 29, 2021, JPMorgan Chase announced an increase in holdings of a domestic financial giant. The company’s H shares have fallen by more than 40% this year, and have broken its historical record for 7 consecutive months (previously, it was 5 consecutive months).
CathieWood, the founder of the Ark Fund and the goddess of technology stocks, also sticks to the underperforming technology stocks in China this year.
Are these investment tycoons’ bargaining or sticking right? No one can predict.
”Bargain hunting” may be a word that ordinary investors will be very excited when they hear it. Copying to the end means that there will be huge room for upside.
However, in the eyes of many investment gurus, copying to the end is not important.
The operations of these investment masters may seem ordinary, but for ordinary people, it may be difficult to get to the sky.
One reason, cognitive ability of different
investment guru based stock trading, mainly stock fundamentals, undervalued and the large potential of the company, is a favorite investment gurus.
The mere rise and fall of stock prices and short-term account profits and losses are not the main basis for their buying and selling decisions.
For example, Buffett bought a certain car stock because he thought it was a good company that was undervalued. As for the selling point, he can only sell if he thinks there is a problem with the company’s fundamentals.
In 2008, Buffett bought the auto stock, and the stock price rose from 8 Hong Kong dollars to 80 Hong Kong dollars. Everyone exclaimed that the stock god is indeed the stock god. Buffett didn’t sell it.
Later, the company was dormant for many years, and the stock price remained flat for a long time, and even fell to 9 Hong Kong dollars, another “old man”. Buffett didn’t sell it.
This year its stock price rose to more than 200 Hong Kong dollars, “the stock god is still the stock god.”
Perhaps in the eyes of Buffett, the company is a good company, and it is not bad for money. Why sell it?
The second reason is that the financial strength and source of funds are different
This is the objective reason for existence.
For example, Buffett and Munger have a transaction volume of hundreds of millions of dollars when they make a deal. In many cases, they become major shareholders when they buy.
For them, buying stocks really means buying the company, and grow with the company, and even intervene in the company’s operations.
Even short-term losses do not matter to them. For one thing, I won’t use the money to buy a house, get married, or provide for the elderly. Even if it doesn’t increase for 100 years, I can still bear the consequences. Moreover, their follow-up funds are abundant, and they can continue to “buy dips” and dilute costs.
Ordinary investors simply cannot do this, and it is difficult to be willing to make progress together with the company and share long-term development dividends.
As a result, they can only be immersed in the mass market noise, anxious, impetuous, greedy and fearful.
03
”Our investment style is called focus investment. It is intended to hold 10 stocks instead of 100 or 400. Good investments are hard to find, so we should focus on the few good ones. This is very useful to me. Obvious thing. But 98% of people in the investment world don’t think so. This is good for us.” Charlie Munger said.
From the 13-F document published by DJCO, Munger’s understanding of opportunities can also be seen.
The documents show that DJCO only holds 5 stocks. A certain bank stock accounted for as high as 43.35%, making it the largest heavyweight stock.
Dare to make heavy moves on promising opportunities is also an important means for Mungers to make big money.
First, the amount of funds is indeed large, and second, they use “buckets” instead of “thimble” to pick up opportunities.
There are two perceptions behind this.
First, there are very few real opportunities for wealth that can appear in a lifetime.
Second, small successes don’t make much sense. In the real investment market, many investors frequently buy and sell to earn a small amount of money, hoping to accumulate less, but the overall profit is not much.
Dan Ariely, a former professor at the Massachusetts Institute of Technology, said in the book “Weird Behavior: Predictable Irrationality” that when people face multiple choices, even if they know that one of them can achieve the greatest success, they still Reluctant to give up other options easily, because our brains are naturally repellent and resistant to risks.
Investment gurus dare to use “buckets” to pick up opportunities, and in many cases it is a deliberate consideration.
For example, Munger once said that he has read “Barron’s Weekly” magazine for 50 years. For 50 years, only one investment opportunity was found in Barron’s.
This may be the insurmountable gap between us and the investment guru.
