Charlie Munger's Three Core Holdings Reveal How Concentrated Bets Outperform Market Chaos

A Maverick Approach to Building Wealth

Charlie Munger, long-time vice chairman of Berkshire Hathaway, built a $2.6 billion fortune using a strategy that flies in the face of conventional wisdom. Rather than spreading capital across dozens of holdings, he deployed almost his entire wealth into just three investments—a discipline that has proven remarkably prescient even after his passing in November 2023.

The late investment legend famously dismissed diversification as a crutch for those lacking conviction. “It’s a rule for people who don’t know anything,” he declared, a view shared by his partner Warren Buffett, who noted that diversification makes “very little sense for anyone with genuine investing expertise.” This wasn’t arrogance; Munger had earned the credentials to back it up. Before joining Berkshire, his personal fund generated 19.5% average annual returns from 1962 to 1975—nearly four times the performance of the Dow Jones Industrial Average.

The Three Pillars of Munger’s Wealth

Costco Wholesale: The Retailer He Called “Perfect”

Munger’s longest-held conviction was Costco Wholesale [(NASDAQ: COST)], where he served on the board for decades. He famously declared himself “a total addict” and promised never to sell a share, boasting over 187,000 shares valued at $110 million in 2022.

The subsequent two years validated his devotion. Since late 2023, Costco shares have surged 47%, while the company simultaneously raised its dividend by 27%. Additionally, investors received a special $15-per-share dividend in January 2024, delivering an additional 2.3% yield independent of price appreciation.

Himalaya Capital: The Private Fund Bet

In the early 2000s, Munger entrusted $88 million to Himalaya Capital, a fund managed by Li Lu—dubbed the “Chinese Warren Buffett” for his mastery of value investing principles. Munger’s confidence proved warranted; he repeatedly praised the fund’s “ungodly returns.”

While Himalaya doesn’t publish regular track records as a private hedge fund, its portfolio composition tells a revealing story. Alphabet [(NASDAQ: GOOGL/GOOG)] represents nearly 40% of fund assets and has climbed 130% since Munger’s death. Berkshire Hathaway holdings similarly posted solid gains during this stretch, signaling robust overall performance.

Berkshire Hathaway: The Concentrated Crown Jewel

Despite his $2.6 billion net worth, Munger maintained a surprisingly concentrated stake in Berkshire itself—roughly 90% of his personal wealth. This wasn’t always the plan; he’d sold or donated approximately 75% of his original 18,829 Class A shares from 1996. Had he retained everything, his net worth would have approached an estimated $10 billion.

At his passing, Munger held 4,033 Class A shares worth approximately $2.2 billion. Since then, Berkshire Hathaway Class A shares have climbed 37%.

The Verdict: Performance Beyond Numbers

Over the two-year-and-one-month period since Munger’s November 2023 death, his holdings have delivered compelling results: Costco up 47%, Berkshire Hathaway up 37%, and Himalaya’s top holdings suggesting strong double-digit returns. While these gains haven’t quite matched the S&P 500’s 52% surge, the comparison misses the deeper point.

Munger’s three investments represent fortress businesses with sustainable competitive advantages—what he and Buffett called “economic moats.” These companies can weather various market cycles and economic conditions while maintaining pricing power and customer loyalty. Such resilience typically comes with lower volatility and downside risk compared to broader market indices.

The enduring lesson: In an era where value investing faces headwinds against growth-focused strategies, Charlie Munger’s concentrated portfolio demonstrates that conviction backed by rigorous analysis—and the discipline to hold quality assets—remains a timeless path to wealth creation.