The final chapter of the life of Charlie Munger, Warren Buffett's golden partner, is little known.
According to the latest reports, a year before his death, he invested in a niche industry that had been avoided for 60 years, from which he profited more than $50 million. He also increased his investment in real estate, partnering with a young neighbor to make a large long-term investment.
Betting on this niche industry
Charlie Munger graduated from Harvard Law School and co-founded the Los Angeles-based law firm of Charlie Munger, Tolstoy, and Olson. In 1962, he left law school to focus on investing, and in 1978 he joined Berkshire Hathaway.
Munger became Buffett's advisor and strategist, urging him to broaden his investment criteria and shift his focus from solely investing in low-priced companies to investing in high-quality ones. "In business decisions, Charlie and I are interchangeable," Buffett said in 1982.
In the last decade of his life, he had less contact with the company, but he would still speak with Buffett every week or two. Buffett lived in Omaha, Nebraska, while Munger lived in Los Angeles, and both had hearing impairments, which made communication even more difficult.
“They would shout loudly,” said Whitney Jackson, Munger’s granddaughter-in-law, who often visited him. “It might be to keep it a secret, but people within a mile could hear it,” she said.
Friends say that for decades he'd paid almost no attention to coal stocks, but in 2023 these companies caught his eye. Coal consumption has been declining for a long time, and investors believe the coal industry... The outlook is bleak. However, many coal producers remain profitable, and their stock prices are low. Munger told friends that coal remains essential as global energy demand grows.
“He read an article that said the coal industry was declining,” recalled Munger’s stepson, Hal Borthwick. “He said, ‘Nonsense.’”
In May 2023, Munger acquired the coal mining company Console Energy. He bought shares of Consol Energy. Later that year, he also bought shares of Alpha Metallurgical Resources. By the time Munger died, Consol Energy 's stock price had doubled. Alpha Metallurgical Resources' stock price had also risen sharply. Friends say he made a total of over $50 million in paper profits.
“He made a big bet, and it was a huge success,” Boswick said.
Another investment
In 2005, when Munger was 81 years old, a 17-year-old neighbor named Avi Mayer knocked on Munger's door in the Hancock Park neighborhood of Los Angeles. Mayer was having trouble at school. He suffered from attention deficit hyperactivity disorder (ADHD) and felt lost about the future. "I was very insecure," he said. "My friends were all in college, and I wasn't."
Mayer began spending time with Munger. "He listened to my troubles and discussed life principles and personal values with me," Mayer said.
Munger had told others that he admired Mayer's intelligence and ambition. He supported Mayer's decision to forgo university and suggested that Mayer attend "Munger University." And so Mayer did.
“I observed his every move and learned from him; he would occasionally give me some books,” Mayer said.
When Mayer partnered with his childhood friend Reuven Gradon to invest in real estate, Munger kept a close eye on the situation, and a few years later, he offered to invest in the two young men's company, Efton Properties.
“I’ll get you all graduated (from Munger University),” he said. Starting around 2017, the three men purchased nearly 10,000 “garden-style” apartments in Southern California, becoming one of the state’s largest owners of low-rise apartments.
In the years leading up to his death, Munger was involved in almost every aspect of their business, personally handling everything from site selection and building assessments to choosing paint colors. Mayer, now 37, said that Munger was particularly interested in landscape details, insisted on building low-density building complexes, and decided the company should spend hundreds of thousands of dollars planting new trees.
While other real estate investors preferred short-term debt that could be quickly refinanced, Munger encouraged Mayer and Gratton to apply for long-term loans, believing that obtaining favorable interest rates and holding assets for the long term was the way to make a profit.
According to a source familiar with the matter, Ifton's assets are now worth approximately $3 billion. Munger remained involved in the company until the very end, helping negotiate the acquisition of a building in Santa Maria, California, a deal completed days after his death. It was located directly opposite a newly opened Costco supermarket, which particularly resonated with Munger. He was a board member of the retail giant Costco and a huge fan of the company, holding approximately $100 million worth of shares at the time of his death.
The Last Ten Years
Munger didn't talk about it much, but his health began to deteriorate in the last decade of his life. Back in 1978, a surgeon botched his cataract surgery, causing him to lose sight in his left eye. Around 2014, Munger developed a problem with the optic nerve in his right eye. He faced the possibility of blindness, but he accepted the blow with equanimity, deciding to adjust his lifestyle, have someone read to him, and explore other options.
“I have to learn Braille,” he told a friend. He had tried learning Braille after a failed cataract surgery but had never been able to master it and was preparing to try again.
However, while his right eye gradually improved, his eye movement became limited. Around 2016, he lost the ability to play golf and could only walk with the aid of crutches. Playing bridge with others also became difficult.
After losing his wife in 2010, Munger chose to spend more time with friends to lift his spirits. Every Tuesday, he would have breakfast with about six business partners and others, usually at the Los Angeles Country Club. This group typically arrived at 7:30 a.m. and would chat for hours. They discussed investments, joked with each other, and shared anecdotes. Regulars included investors John Hawkins and John Cornell, and Uber. Chairman Ron Sugar, and later former Activision Blizzard CEO Bobby Coty Munger, seated at the head of the table, told stories and shared his philosophy of life.
“He always said, ‘If you remove Berkshire’s top five investments, its returns are actually quite mediocre,’” one participant said. This statement taught everyone a lesson: success often stems from a few successful investment decisions.
Munger maintained his characteristic sharpness. On one occasion, a Ford... Company executives also joined their breakfast club, and Munger unexpectedly gave a detailed presentation on the automaker's profitability over the past 25 years, broken down by product line. Then, Munger dropped a bombshell: "I really don't understand why you guys bother building cars at all," he said, noting that most of Ford's profits came from trucks.
Munger was in high spirits at these meetings, the last of which was held ten days before his death.
Food also became one of his special hobbies. Every Friday, his friends would drive to Munger's house for lunch, bringing chicken sandwiches on soft white bread with butter, sometimes with the crusts removed. They would also bring fruit or salad, as well as cherry pie and vanilla ice cream.
For years, Munger's family had tried to get him to eat healthily, but he resisted relentlessly. "He drank water like it was poison," Jackson said. The last takeout he ordered was Korean fried chicken: a whole chicken, kimchi fried rice, and waffle fries.
“He liked Costco hot dogs,” she said. “One of his last meals in the hospital was an In-N-Out burger and a Diet Coke.”
Near the end of his life, he shared a wish with a visitor. "Oh, I wish I could go back to being 86 years old," he said.
Two years ago, on Thanksgiving night, just days before his death, Munger was admitted to the hospital. He asked his family to leave the room so he could make one last phone call to Buffett to say his final goodbyes.
Friends and family said that Munger's remarkable experiences in the final stage of his life provided valuable lessons for investors and set an example of how to age gracefully, calmly, and purposefully. "His mind remained sharp until the day he died," Boswick said. "He never stopped learning."
(Article source: CBN)
