There’s perhaps no investor in the world with a crazier life story than Li Lu.
From being taken from his parents as an infant, to surviving one of the deadliest earthquakes in history, to helping lead the Tiananmen Square protests, to being forced into hiding and eventually escaping China through a smuggling route, you could be forgiven for thinking his story was fiction.
But at 23 years old, Li Lu finally arrived in the United States and was granted asylum by the US government. And from there he didn’t waste much time.
Lu, who had already majored in Physics at Nanjing University in China, learned English in a single summer (yes, you read that correctly) and enrolled at Columbia University where he earned a degree in Economics and simultaneous graduate degrees in Business and Law.
While at Columbia, Lu mistakenly attended a lecture given by Warren Buffett after mishearing a friend and thinking there was a free buffet. As it turns out, that lecture would change his life.
Starting Himalaya Capital
Despite being heavily recruited by many of the top hedge funds and investment banks after graduating from Columbia, Li Lu decided to go his own way.
After being inspired by Buffett’s lecture, Lu began following the value principles that Buffett espoused and investing his own money. In doing so, Lu made some meaningful returns. So much so that in 1997 he decided to launch a hedge fund of his own called Himalaya Capital.
During the early days of running Himalaya Lu attended a dinner at a friend’s house in LA where he met Charlie Munger. The two stayed in touch and 7 years later, Munger finally inquired to learn more about the fund.
In Lu’s words “at a Thanksgiving gathering in 2003, we had a long heart-to-heart conversation. I introduced every single company I have invested in, or researched, or am interested in to Charlie and he commented on each one of them.”
At the end of the conversation Munger did something he’s never done. He told Lu that he would invest in Himalaya on the condition that he not take on any additional investors. Lu agreed, and in 2004 Munger wrote Himalaya an $88 million check to manage.
Li Lu’s Best Investments
After receiving the investment from Munger, Lu immediately began buying up shares of two Chinese businesses that have both delivered remarkable returns for investors.
BYD
In 2004, BYD was just a little-known maker of electric batteries. Today, they’re the largest electric vehicle company in the world.
BYD is perhaps the closest thing the world has to a vertically integrated clean energy company, and they have dominated the market through technological innovations and the hard-nosed efficiency that Chinese manufacturers are famous for.
Li Lu not only found this investment for himself early on but was able to do enough convincing with Charlie that Berkshire Hathaway even took a 10% stake in the company in 2008.
Since 2004, shares of BYD are up 7,826%, or a 23% annual return.
Kweichow Moutai
Unlike BYD, by the time Li Lu began buying shares of Kweichow Moutai, the company was already an established leader in the Chinese alcohol industry. However, its already significant size did not diminish returns for investors.
After the communist revolution, China boomed and the purchasing power of Chinese consumers soared. This led to significant growth in volume for Moutai’s popular baiju brand.
Beyond strong sales growth, Moutai’s business model has some attractive characteristics that helped them expand profit margins as well. The grains required to make baiju are extremely low-cost and can only be grown in certain geographies. Thanks to the minimal input costs and restricted supply Moutai is able to generate 92% gross margins today.
Since 2004, Kweichow Moutai’s stock is a 287-bagger and is now the largest alcohol company in the world by market cap.
Holdings and Total Returns:
Himalaya Capital is highly secretive, so unfortunately it's hard to find any concrete data on the firm's total returns.
Rumors are that Himalaya has produced around 30% annual returns for investors since inception, and given the returns of some of Himalaya's individual stock positions, that figure wouldn't seem to far-fetched.
What we do know for sure is that in 2004, Charlie Munger wrote Li Lu an $88 million check and as of 2023 Himalaya had $14 billion in AUM.
While Himalaya doesn't disclose all their positions (such as anything listed in China or Hong Kong), we do get a glimpse at their US listed holdings each quarter.
Here are Himalaya's US holdings as of April 2025:
