Himalaya Capital, the investment firm led by Li Lu, has a focused investment strategy that heavily concentrates its holdings in a few select stocks. The firm, known for managing the assets of the late Charlie Munger’s family, has consistently maintained a concentrated portfolio. With an emphasis on long-term value investing, Himalaya Capital’s latest filings reveal that 83% of its $2.71 billion portfolio is allocated to just three companies: Bank of America, Alphabet, and Berkshire Hathaway (NYSE:BRK.A). This approach highlights the firm’s commitment to investing in businesses it considers to have strong fundamentals and growth potential.
Previously, Himalaya Capital’s portfolio allocation has remained heavily concentrated, reflecting Li Lu’s adherence to value investing principles. Over the years, the firm has made relatively few adjustments to its holdings, reinforcing its strategy of long-term conviction in select businesses. Compared to past allocations, the current breakdown remains consistent with Himalaya’s history of investing in financial institutions and technology companies. The firm’s approach has been closely observed by investors, given its association with Munger and its disciplined investment philosophy.
Why Does Himalaya Capital Favor Alphabet?
Alphabet represents the largest portion of Himalaya Capital’s portfolio, accounting for 39.2% of its total assets. The firm holds both Class A (GOOGL) and Class C (GOOG) shares, with investments totaling over $1 billion. Despite market fluctuations, Himalaya has largely maintained its stake in Alphabet, with the last recorded adjustment occurring in 2022. This suggests a long-term belief in Alphabet’s ability to generate consistent returns through its core businesses, including Google (NASDAQ:GOOGL) and YouTube.
What Role Does Bank of America Play in the Portfolio?
Bank of America makes up 29.31% of Himalaya Capital’s assets, making it one of its most significant investments. The firm initially purchased the stock in 2020 and has periodically increased its position, particularly during market corrections. These additional purchases indicate confidence in the financial stability and growth prospects of the bank. Aside from Bank of America, the hedge fund also holds a position in East West Bancorp, a regional bank, which comprises 9.29% of the portfolio.
Li Lu’s investment philosophy aligns with value investing principles, which emphasize patience and conviction in a few well-selected companies. As he mentioned in a past publication:
“One common problem for investors is that they tend to swing too often. However, the opposite problem is equally harmful to long-term results: You discover a ‘fat pitch’ but are unable to swing with the full weight of your capital.”
This perspective explains the firm’s highly concentrated portfolio, focusing on businesses with strong fundamentals rather than diversifying across numerous investments.
Berkshire Hathaway is another core holding in Himalaya Capital’s portfolio, representing over 15% of its assets. The hedge fund first acquired shares in 2021 and has not made any changes to its position since then. Given Li Lu’s close relationship with Munger, this investment aligns with his admiration for Berkshire’s long-term value-oriented approach. While Berkshire Hathaway remains a stable component of the portfolio, its future role may depend on leadership transitions at the company.
Himalaya Capital’s investment strategy continues to reflect Li Lu’s long-standing commitment to concentrated value investing. By allocating the majority of its assets to a few stocks, the firm aims to maximize returns while reducing unnecessary trading. Investors observing Himalaya’s approach may find insights into how long-term conviction plays a role in portfolio performance. As financial markets evolve, the firm’s adherence to its core principles will determine how successfully it navigates economic shifts and industry developments.
