AP Photo/Nati Harnik
Charlie Munger's Daily Journal cashed in one of its most lucrative investments, borrowed some extra money, and plowed the total amount into an undisclosed stock in the fourth quarter.
Warren Buffett's business partner and the newspaper publisher's chairman sold $50 million worth of stock in December, marking a 15-fold return on a $3.3 million cost base, he revealed in Daily Journal's earnings this month.
Munger, who also serves as Berkshire Hathaway's vice-chairman, combined the proceeds with $37 million from Daily Journal's margin-loan account, enabling him to plow $87 million into other securities.
Daily Journal suffered $30 million in unrealized losses tied to those purchases in December. Munger's use of margin surprised many of his followers, given his repeated warnings about the dangers of investing borrowed money.
"We don't mind a tiny little bit of margin debt," Munger replied when asked about the wager during Daily Journal's annual meeting this week.