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Li Lu: The Man Who Impressed Charlie Munger
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Every once in a while, an individual redefines the landscape of their field through a combination of skill and perseverance. Li Lu stands as a shining beacon of such exceptionalism in the world of investing. With a life story that reads like a captivating novel, Lu's rise from his early days in China to becoming one of the most famous investors globally is nothing short of remarkable. This article will explore the fascinating story of Li Lu, the man behind Himalaya Capital, and his close association with Warren Buffett and Charlie Munger. Let's jump right in.
Key Insights
Li Lu overcame significant challenges in his early life in China, including surviving the Tangshan earthquake and the Cultural Revolution, before moving to New York at 23 to pursue a career in finance.
After graduating from Columbia University with three degrees, Li Lu founded Himalaya Capital, a hedge fund that grew to manage $14 billion by 2023, achieving a 30% compound annual return since 1998.
Lu's investment prowess caught the attention of Charlie Munger, leading to collaborations with Berkshire Hathaway, including a significant investment in BYD, a Chinese battery and automobile manufacturer.
Despite his estimated multi-billion dollar net worth, Li Lu maintains a modest lifestyle and is actively involved in philanthropy, with a strong focus on education and scholarships.
From China to Wall Street: The Early Years
Born in China in 1966, Li Lu's early years were marked by hardship, including the tumultuous Cultural Revolution that disrupted his homeland. He was also a survivor of the 1976 Tangshan earthquake, one of the deadliest in recorded history. Despite these challenges, Lu's determination led him towards a future that few could imagine. He ultimately fled to New York at the age of 23, where he cultivated his keen interest in finance and investing.
It was at Columbia University where Lu truly found his passion. After completing his three degrees in economics, law, and business, he kick-started his finance career by founding Himalaya Capital. What started as a small hedge fund has grown exponentially over the years with Lu’s disciplined investment philosophy as foundation. As of March 2023, Himalaya Capital manages roughly $14 billion in assets.
Lu was heavily influenced by the principles of value investing, an approach popularized by Benjamin Graham and Warren Buffett. In essence, value investing involves buying securities that appear underpriced based on fundamental analysis. This philosophy has been central to Lu's success in building a robust and impressive portfolio, helping Himalaya Capital grow into a multi-billion-dollar investment firm with a remarkable 30% compound annual return since its inception in 1998.
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The connection between Li Lu and Warren Buffett can be traced back to Lu's student days at Columbia University, where he was deeply influenced by Buffett's investment philosophy. However, it was through Charlie Munger, Buffett's long-time business partner and Vice-Chairman of Berkshire Hathaway, that Lu first came in contact with Buffett.
In the late 2000s, Lu's keen investment insights caught Munger's attention. So impressed was Munger by Lu's capabilities and the success of Himalaya Capital that he not only invested his own money with Lu but also introduced him to Buffett. Perhaps the most notable collaboration between Berkshire Hathaway and Himalaya Capital was their investment in the Chinese battery and automobile manufacturer, BYD. It was Lu who introduced BYD to Buffett and Munger, leading to a significant investment by Berkshire Hathaway in the company.
Their professional bond has strengthened over the years. Buffett has often praised Lu's investment sharpness and has even viewed him as a potential candidate to oversee a portion of Berkshire Hathaway’s enormous investment portfolio. Meanwhile, Charlie Munger continues to entrust a substantial part of his net worth to Lu's money management.
Li Lu's Net Worth
With a current estimated net worth of several billion dollars, Li Lu has not just built an empire, but has also established himself as one of the wealthiest self-made individuals globally. Yet, he remains modest about his wealth, choosing instead to focus on creating value through long-term investments and maintaining a frugal lifestyle.
Beyond Investing: Li Lu's Philanthropic Pursuits
Li Lu's life story is not just about investing. Beyond his portfolio and net worth, Lu's contributions to philanthropy and humanitarian causes are equally remarkable. He is a strong proponent of higher education and dedicates a substantial amount of his wealth towards scholarships and other educational initiatives.
In Conclusion
Li Lu's journey, from facing hardships in China to establishing himself as a formidable force in the global investment arena, is a testament to his resilience, brilliance, and commitment to his craft. His deep-rooted belief in value investing, a philosophy he shares with the likes of Warren Buffett, has been the cornerstone of his success. But beyond the numbers and investment strategies, Lu's character truly shines. He hardly had the odds on his side but succeeded extremely well nonetheless. Thus, Li Lu is an inspiration not only in the realm of finance but also as a testament to the idea that with perseverance and determination, anything is possible.
Further Reading
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