Li Lu - Himalaya Capital Management
Li Lu - Himalaya Capital Management Q3 2024 Portfolio
Himalaya Capital Management , a value investing firm managed by Li Lu, disclosed 8 security holdings in their SEC 13F filing for the third quarter of 2024, with a total portfolio value of $2,472,446,000
BAC – Bank of America Corp.
Portfolio Allocation: 29.02%
Recent Activity: No change reported
Shares Held: 18,081,133
Reported Price: $39.68 per share
Value at Reported Price: $717,459,000
Bank of America represents the largest holding in Li Lu’s portfolio, showcasing his commitment to the financial sector. As one of the leading U.S. banks, Bank of America offers a strong retail banking presence and diversified financial services, making it a cornerstone of Li Lu’s investments.
GOOG – Alphabet Inc. CL C
Portfolio Allocation: 20.58%
Recent Activity: No change reported
Shares Held: 3,044,000
Reported Price: $167.19 per share
Value at Reported Price: $508,926,000
Alphabet Inc. CL C is the second-largest holding, reflecting Li Lu’s confidence in the technology sector. Alphabet, as the parent company of Google, dominates the digital advertising market and invests in high-growth areas like cloud computing and AI, aligning with Himalaya Capital’s long-term growth strategy.
GOOGL – Alphabet Inc.
Portfolio Allocation: 17.06%
Recent Activity: No change reported
Shares Held: 2,543,300
Reported Price: $165.85 per share
Value at Reported Price: $421,806,000
The Class A shares of Alphabet further illustrate Li Lu’s commitment to this tech giant, positioning Alphabet as a dual, high-conviction investment within the portfolio. This investment strategy demonstrates confidence in Alphabet’s continued leadership in technology and innovation.
BRK.B – Berkshire Hathaway CL B
Portfolio Allocation: 16.71%
Recent Activity: No change reported
Shares Held: 897,749
Reported Price: $460.26 per share
Value at Reported Price: $413,198,000
Berkshire Hathaway’s Class B shares represent a significant portion of the portfolio. Known for its diverse holdings and strong management under Warren Buffett, Berkshire Hathaway offers stability and a mix of value-driven investments that align with Himalaya Capital’s long-term value focus.
EWBC – East West Bancorp
Portfolio Allocation: 9.29%
Recent Activity: No change reported
Shares Held: 2,776,351
Reported Price: $82.74 per share
Value at Reported Price: $229,715,000
East West Bancorp, a regional bank with a focus on U.S.-China cross-border banking, remains an essential holding. This position reflects Li Lu’s interest in financial services, particularly in companies bridging business between the U.S. and Asia, making it a unique investment within the portfolio.
OXY – Occidental Petroleum
Portfolio Allocation: 3.06%
Recent Activity: No change reported
Shares Held: 1,466,500
Reported Price: $51.54 per share
Value at Reported Price: $75,583,000
Occidental Petroleum provides exposure to the energy sector, allowing Himalaya Capital to capitalize on oil and gas market trends. With a diversified portfolio, Occidental strengthens the portfolio’s resilience amid fluctuating energy prices.
AAPL – Apple Inc.
Portfolio Allocation: 2.99%
Recent Activity: Reduced 58.18%
Shares Held: 317,700
Reported Price: $233.00 per share
Value at Reported Price: $74,024,000
Apple saw a substantial reduction in Q3, suggesting profit-taking or a reallocation of capital. Despite this decrease, Apple remains a valuable investment, benefiting from its strong brand, ecosystem of products, and growth in services.
SOC – Sable Offshore Corp
Portfolio Allocation: 1.28%
Recent Activity: New Buy
Shares Held: 1,343,000
Reported Price: $23.63 per share
Value at Reported Price: $31,735,000
Sable Offshore Corp, a recent addition, marks an entry into offshore energy. This investment could reflect a contrarian view on the energy sector, with potential for gains from specialized energy companies that focus on offshore oil and gas production.
Analysis of Li Lu’s Q3 2024 Portfolio Strategy
1. Concentrated Bets on Financials and Tech
Bank of America, Alphabet, and Berkshire Hathaway represent the majority of the portfolio, reflecting Li Lu’s high-conviction bets in financial services and technology. This focused approach showcases Himalaya Capital’s confidence in established, cash-generating companies with long-term growth prospects.
2. Strategic Reduction in Apple
The significant reduction in Apple could indicate a strategic decision to capitalize on gains or diversify the portfolio. Apple remains a part of the portfolio but with less weight, suggesting a shift towards other opportunities.
3. Selective Energy Exposure
The holdings in Occidental Petroleum and the new position in Sable Offshore Corp add diversification within the energy sector. This balanced approach allows exposure to both traditional and offshore oil production, potentially offering resilience against market volatility.
Conclusion
Li Lu’s Q3 2024 portfolio at Himalaya Capital Management is characterized by high-conviction, long-term investments in financials and technology, alongside a cautious expansion into energy. The portfolio reveals a preference for quality and stability, with selective adjustments that demonstrate a disciplined value-investing approach in a dynamic market environment.
Who is Li Lu ?
1966:
Born on April 6 in Tangshan, Hebei, China.
1976:
Survived the Tangshan earthquake, one of the deadliest in recorded history.
1985:
Enrolled at Nanjing University, initially majoring in Physics before transferring to Economics.
1989:
Became a leading figure in the Tiananmen Square student protests, organized students, and participated in a hunger strike. Fled to New York City after the protests were suppressed.
1990:
Published “Moving the Mountain: My Life in China,” a book about his experiences in China and the Tiananmen Square protests.
1990s:
Enrolled at Columbia University, first in the American Language Program, then in the School of General Studies, and later transferred to Columbia College.
1993:
Inspired to pursue investment after attending a lecture by Warren Buffett at Columbia University.
1996:
Graduated from Columbia University with three degrees: a B.A. in economics, an M.B.A., and a J.D. Began a career in investment banking as a corporate finance associate at Donaldson, Lufkin & Jenrette.
1997:
Founded Himalaya Capital Management, focusing on a disciplined and value-oriented approach to investing.
2003:
Met Charlie Munger, who became an investor in his fund and a mentor. This relationship led to the transformation of his hedge fund into a long-only investment vehicle.
2004-2013:
The fund was closed to new investors and focused on global investment opportunities without charging a management fee.
2010:
Withdrew from consideration to manage a significant portion of Berkshire Hathaway’s investment portfolio post-Warren Buffett.
2020:
Elected to The American Academy of Arts and Sciences. Co-founded the Guardians of the Angeles Charitable Foundation to address the global COVID-19 crisis. Published “Civilization, Modernization, Value Investment and China.”
2021:
Co-founded The Asian American Foundation, serving as its chairman, to support Asian American and Pacific Islander communities. Himalaya Capital Management reported managing almost US$18.5 billion in capital.
Ongoing:
Serves as a trustee for both Columbia University and the California Institute of Technology (Caltech). Recognized with several awards and honors, including the John Jay Award from Columbia College, the Raoul Wallenberg Human Rights Award, and the Reebok Human Rights Award. Featured in the Smithsonian Institute’s “Many Voices, One Nation” exhibition.
Li Lu's Investing Principles
Investing is about intellectual honesty. You want to know what you know. You want to know, mostly, what you don’t know.
Part of the game of investing is to come into your own. You must find some way that perfectly fits your personality because there is some element of a zero sum game in investing.
Investing is about predicting the future, and the future is inherently unpredictable. Therefore, the only way you can do better is to assess all the facts and truly know what you know and know what you don’t know. That’s your probability edge.
The game of investing is a process of discovering who you are, what you’re interested in, what you’re good at, what you love to do, then magnifying that until you gain a sizable edge over all the other people.
Being a value investor means you look at the downside before looking at the upside.
Because in investing the more you know the better off you are.
Stocks aren’t just little pieces of paper that you buy and sell. Each one is in fact a certificate bestowing fractional ownership of a company
As far as I can observe and speak to with statistics, there has only been one style which has reliably and safely brought investors exceptional long-term returns: value investing.