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Charlie Munger and stock picks at the Sohn Conference

Graham Hand
4 December 2021
4

The Annual Sohn Australia Conference was held on Friday 3 December 2021, bringing together prominent Australian and international fund managers. In addition to the star of the show, Charlie Munger, each manager chose their highest conviction stock in a 10-minute pitch.

It is presented by the Hearts & Minds Group which includes the $1 billion charitable Listed Investment Company, Hearts and Minds Investments (ASX:HM1) and has donated over $30 million to Australian medical research.

Most of the fund managers are not well-known in Australia and as many of the stocks are listed overseas, they may not appeal directly to local investors. Rather than trying to pick a winner among the wide selection, when every stock sounds like an excellent company pitched by true believers, the easiest way to gain exposure is by investing in all of them via HM1. Of course, this gives diluted exposure to any one great idea but it also diversifies risk.

The Chairman of HM1 is Chris Cuffe, co-founder of Cuffelinks, the predecessor to Firstlinks. Since the LIC commenced in November 2018, it has outperformed its index, as shown below from its October 2021 Report.

The full presentations will remain online for a few more days at the 2021 Sohn Hearts & Minds Conference link. Firstlinks readers can access 20% off the virtual conference price using the code SHM-FIRSTLINKS at the checkout.

Here are brief highlights from Charlie Munger and a summary of the selected stocks. Anyone considering investing should do their own research and check the full presentation.

In case anyone thinks the market was ready to push recommended stocks higher and compromise later buying opportunities, consider Megaport (ASX:MP1). It opened trading at $21.30 (just after the presentation recommending it), rose to a day's high of $21.87, then traded to $20.825 before closing at $21. No need to panic buy.

Charlie Munger: "even crazier than the dot.com era"

Charlie Munger is now 97-years-old and he has little interest in many of the "wildly overvalued" stock prices which are ignoring fundamentals. He called the cryptocurrency industry "self-serving" and “I wish they’d never been invented.” He hates the way people pile into crypto and would like to see it banned.

Munger praised Costco for its ability to reduce prices due to its purchasing power, and sees its future as an internet force. It is a "competitor from hell" for other retailers such as Amazon, although he is an admirer of Jeff Bezos's achievements.

Munger is a major supporter of renewable energy from wind and solar, regardless of any global warming problem. He advocated the rapid replacement of coal, petrol and diesel but suggested Australia should sell its minerals to China and build a strong relationship.

“I think Australia was very lucky to have China get so prosperous, so it’s been a huge blessing to Australia. I think Australia with its deep involvement in China can be in a constructive position, Australia can encourage the United States and China to be more reasonable.”

Two other Munger quotes:

“I think all successful investing is value investing in the sense that you’re trying to get better prospects than you’re paying for.”

“There’s no great company that can’t be turned into a bad investment just by raising the price.”

Here are snippets from individual fund managers, with charts drawn from the Morningstar database.

1. Qiao Ma from Cooper Investors

Techtronic Industries is known as a power tool industrials company but it should be considered a technology company. It has a deep understanding of its customers needs through product innovation. It grows sales by developing quality products not cutting prices and is expanding into Europe and Asia.