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Investing in

Alibaba, the

Chinese e-commerce giant, was “one of the worst mistakes I ever made”, says Charlie Munger, the longtime business partner of Warren Buffett. Munger invested heavily in Alibaba during 2021 through the Daily Journal – a newspaper publisher/investment vehicle that he runs independently from Berkshire Hathaway – but slashed his stake in 2022. “In thinking about Alibaba, I got charmed with the idea of their position on the Chinese internet. I didn’t stop to realise they’re still a retailer. It’s going to be a competitive business,” he told investors at the Daily Journal’s annual investor meeting this month.

However, he is full of praise for electric-car maker BYD, another leading Chinese firm, which Berkshire Hathaway first bought in September 2008 at Munger’s urging. “I have never helped do anything at Berkshire that was as good as BYD.” Berkshire has been trimming its BYD stake in recent years as the shares rise, and it certainly isn’t a cheap stock any more. “At the current price of BYD stock, little BYD is worth more than [Mercedes]… on the other hand, it’s a very remarkable company.” CEO Wang Chuanfu is a “genius”, says Munger, who is beating Tesla in his domestic market. “Tesla last year reduced its prices in China twice. BYD increased its prices… BYD is so much ahead of Tesla, it’s almost ridiculous”.

Berkshire has also been selling its shares in TSMC, the world-leading Taiwanese semiconductor firm, as the global chip industry shows signs of slowing down. “The semiconductor industry is a very peculiar industry… with each new generation of chips, you throw in all the money you’ve previously made. It’s compulsory investment of everything if you want to stay in the game,” says Munger. “It’s not at all clear to me that they’re not going to succeed mightily… [but] it’s a difficult business and requiring everybody to keep increasing the bets… it’s not so foolproof as it looked.”