Charlie Munger Helped Build Berkshire Hathaway into a Giant

Charlie Munger, Warren Buffett’s right-hand man, died at the age of 99. He was an investing legend, helping to build Berkshire Hathaway into one of the largest companies in the world.

Mr. Munger died on Tuesday morning, November 28^th, at the age of 99. He was known as a polymath with a dry sense of humor, helping to build Berkshire Hathaway (NYSE: BRK.A, BRK.B) alongside Warren Buffett into a nearly $800 billion company. Moreover, he became an investing legend in his own right.

Warren Buffett, the CEO of Berkshire Hathaway, said in a press release, “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom, and participation.”

Munger Grew Up in America’s Heartland but Called California Home

Charlie Thomas Munger was born in Omaha, Nebraska, on January 1, 1924, to a relatively affluent family. Interestingly, as a youth, he worked at Warren Buffett’s grandfather’s grocery store, but the two future partners never met.

In 1941, he went to the University of Michigan but left after two years to join the Army Air Corps. He was sent to the California Institute of Technology (Cal Tech) to study metrology. Later, in 1948, he graduated with a law degree from Harvard Law School.

Afterward, he returned to Pasadena, California, and joined the law firm Wright & Garrett. In 1962, Munger formed Munger, Tolles & Olson, LLP, practicing real estate law. Later, he invested in real estate and started to manage investments at Wheeler, Munger & Co. His firm generated 19.5% average annual compound returns between 1962 and 1975. He closed the partnership in 1975.

In 1978, Charlie Munger joined Berkshire Hathaway as the vice-chairman.

The Partnership Between Buffett and Munger

Charlie Munger returned to Omaha in 1959 to close his father’s law practice. A mutual friend introduced Buffett and Munger, who hit it off immediately. The two stayed in contact, swapping investment ideas. Buffet has been quoted as saying, “We think so much alike that it’s spooky.”

The two exchanged investment ideas for years and had intertwined holdings through their ownership of Blue Chip Stamps Company and Berkshire Hathaway in the 1960s. Blue Chip Stamps had an investment portfolio it used to invest in See’s Candies and Wesco. After partnering with Buffett, Berkshire Hathaway eventually acquired 80.1% of Blue Chip Stamps, and Mr. Munger became the CEO and Chairman of Wesco in 1984.

Charlie Munger turned Wesco into a smaller version of Berkshire, owning or controlling multiple companies and building a multi-billion portfolio in large-cap stocks, like Coca-Cola (KO), Wells Fargo (WFC), Procter & Gamble (PG), Kraft Foods (KFC), US Bancorp (USB), and Goldman Sachs (GS). Sometimes, Wesco would invest alongside Berkshire on deals.

In 2011, Berkshire acquired the remaining ~20% of Wesco that it did not already own. Besides running Wesco, Munger acted as Buffett’s sounding board for decades. He was probably among the few who could tell Buffett he was wrong or an idea was bad.

Charlie Munger Was Known for His Humor and Wisdom

Like many famous investors, Charlie Munger was followed by many everyday people, hoping to gain wisdom and investing insight. During the annual meetings in Omaha, he typically stayed in the background but sometimes offered focused and short answers. 

He was often quoted, too. Advice from Charlie Munger was about investing, life, and charity. He spoke of the things he believed in during interviews. 

One of his most famous quotes about investing was, “Invest in a business any fool can run, because someday a fool will. If it won’t stand a little mismanagement, it’s not much of a business. We’re not looking for mismanagement, even if we can withstand it.”

Similarly, he liked to talk about life and success, “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.” 

Another favorite topic was charity and generosity, “Those of us who have been very fortunate have a duty to give back. Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference.”

Munger Became Extremely Wealthy

Charlie Munger’s fortune reached an estimated $2.3+ billion through his investing activity and holdings in Berkshire Hathaway. He owned roughly about 4,033 shares of Class A shares at the time of his death. The shares closed at $546,869 on November 28, 2023.

His net worth was much less than Warren Buffett’s wealth because of charitable donations. If not for his philanthropy, Mr. Munger would be worth over $10 billion. In 1996, he owned 18,829 shares. He has given away shares worth millions to the University of Michigan, Stanford University, the University of California at Santa Barbara, the Henry E. Huntington Library and Art Museum, and other institutions.

Besides his holdings in Berkshire Hathaway, Charlie Munger owned a significant amount of Costco (COST) stock, where he was a director. Additionally, he was the former Chairman of the Daily Journal Corporation, a publishing company.

The Bottom Line About Charlie Munger

Over a long and successful career and life, Charlie Munger became an investing legend and philanthropist. He built a legacy influencing generations of investors through his actions at Berkshire Hathaway and his sharp wit. The investing and business world reacted with sadness to his passing. Apple CEO Tim Cook posted on the social media site X, “A titan of business and keen observer of the world around him, Charlie Munger helped build an American institution, and through his wisdom and insights, inspired a generation of leaders. He will be sorely missed. Rest in peace Charlie.”

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