Munger Stock Positions in DJCO

[rick_v]

The post about WSC today made me remember something I have been trying to figure out for a bit. Hopefully one of you guys knows the answer to this.

 

During the panic Munger deployed about 15.5m of DJCO cash into some stocks and made about 33m in profits it was really a very cool thing to see in the 10q's of this ordinarily boring company. Did any of you guys pick up on that? If so I have been wondering what stocks he bought a friend mentioned one was WFC... but the positions have not been disclosed!

 

Looking forward to your responses here is a link to the 10K:

 

http://sec.gov/Archives/edgar/data/783412/000119312509253186/d10k.htm

[brker_guy]

"In the panic Munger deployed about 15.5m of DJCO cash into some stocks and made about 33m in profits it was really a very cool thing to see in the 10q's of this ordinarily boring company."

 

It's more like "During the panic, Munger deployed about $15.5m....."  Yes, your friend is correct.  The stock that Munger bought was WFC.  Munger said that it took him a total of 10 sec to make that buy decision on WFC.  If you chart WFC prices during the panic til now, you will see that it tracks this pattern of WFC and Charlie's investment gain.

[rick_v]

Things bring up another point... If WFC is the stock my calculations lead me towards an average purchase price on WFC of 8.75~  Also this would mean that Munger got extremely lucky timing the bottom of WFC he must have owned a ton personally as well.

 

I know that buffet was buying a ton personally and that in Paulsons book there is a letter from him stating his net worth at about 400-500m$ outside of berkshire.

 

Either way this has to be one of the most brilliant trades inside of a public company ever! 

[brker_guy]

"Also this would mean that Munger got extremely lucky timing the bottom of WFC he must have owned a ton personally as well."

 

If you believe he was "extremely lucky", I have nothing to add... :-)

[rick_v]

He was in terms of catching a falling knife, I am sure he built positions personally at higher levels and we know berkshire definitely has a higher cost average. I am not discounting the fact that it was a brilliant investment it was ! Just saying his entry was flawless.

[Parsad]

Either way this has to be one of the most brilliant trades inside of a public company ever!

 

Yup, it was pretty brilliant!  I would say Fairfax's shift from treasuries/CDS to municipals/corporates/equities was equally fantastic.  They were pretty much 90%+ out of the CDS' at the bottom, and bought $6B of Berkshire-guaranteed, tax-free munis paying on average about 5.5-6%.  They also closed their S&P500 and other basket hedges right at the bottom, while snapping up WFC, GE, JNJ at or near the bottom...as well as many of the preferred deals Berkshire got...other than Goldman.  Cheers!

[Guest Bronco]

I think one of the differences between Munger and Buffett and many others is this:

 

They know what they think are great businesses, probably have a good deal of the LT value in their heads.  How many annual reports has Buffett read over the years? 

 

When those businesses become severly undervalued, they don't need the homework.  It's already been done.

 

My point is they are less reactive to the market.  They don't wake up and say "what looks good today".  They know what's good, and they wait for their price.

 

Not saying this is always true, but that is why it takes them 10 seconds to make a decision.  I don't think you will find Berkshire making many investments in companies that don't have long term competitive advantages.  Everyone knows this, but they are religous about it.

 

 

 

[Guest longinvestor]

I think one of the differences between Munger and Buffett and many others is this:

They know what they think are great businesses, probably have a good deal of the LT value in their heads.  How many annual reports has Buffett read over the years? 

When those businesses become severly undervalued, they don't need the homework.  It's already been done.

My point is they are less reactive to the market.  They don't wake up and say "what looks good today".  They know what's good, and they wait for their price.

Not saying this is always true, but that is why it takes them 10 seconds to make a decision.  I don't think you will find Berkshire making many investments in companies that don't have long term competitive advantages.  Everyone knows this, but they are religous about it.

 

These  are the 1 foot hurdles and the hurdles are set by themselves. They avoid the 3 ft hurdles let alone the pole vaults!

The investment moves made by BRK from 2008 on are hardly priced into the stock, time will tell!

 

[ERICOPOLY]

Either way this has to be one of the most brilliant trades inside of a public company ever!

 

Yup, it was pretty brilliant!  I would say Fairfax's shift from treasuries/CDS to municipals/corporates/equities was equally fantastic.  They were pretty much 90%+ out of the CDS' at the bottom, and bought $6B of Berkshire-guaranteed, tax-free munis paying on average about 5.5-6%.  They also closed their S&P500 and other basket hedges right at the bottom, while snapping up WFC, GE, JNJ at or near the bottom...as well as many of the preferred deals Berkshire got...other than Goldman.  Cheers!

 

From what I understand the current price of WFC is only about 20% higher than what Fairfax paid.  Somebody posted about a year ago that Fairfax got their WFC for roughly $19 or $20 -- I think they found that price from the ORH filings.

 

The only reason I remember this is that about a year ago people were suggesting that Fairfax should dump it at $24.

 

[oec2000]

Either way this has to be one of the most brilliant trades inside of a public company ever!

 

Yup, it was pretty brilliant!  I would say Fairfax's shift from treasuries/CDS to municipals/corporates/equities was equally fantastic.  They were pretty much 90%+ out of the CDS' at the bottom, and bought $6B of Berkshire-guaranteed, tax-free munis paying on average about 5.5-6%.  They also closed their S&P500 and other basket hedges right at the bottom, while snapping up WFC, GE, JNJ at or near the bottom...as well as many of the preferred deals Berkshire got...other than Goldman.  Cheers!

 

From what I understand the current price of WFC is only about 20% higher than what Fairfax paid.  Somebody posted about a year ago that Fairfax got their WFC for roughly $19 or $20 -- I think they found that price from the ORH filings.

 

The only reason I remember this is that about a year ago people were suggesting that Fairfax should dump it at $24.

 

 

You are right. Prem also discussed it at the 2009 AGM and explained that they did not buy more when it went lower because they had hit their position limit. For some reason, the price of $17 is what sticks in my head as the lowest price they paid for WFC - so not quite near the lows.