Jump to content

Li Lu: Himalaya Capital Management LLC


freddy02

Recommended Posts

"Li was rumored to be the front runner to manage a large portion of Berkshire Hathaway's investment portfolio once Warren Buffett steps down. According to The Wall Street Journal, Charlie Munger once said "it is a foregone decision" that Li Lu would be going to be a member of Berkshire's top investors team after Warren Buffett retires. This was also hinted several times in some conversations with Buffett"

 

https://www.wsj.com/articles/SB10001424052748703977004575393180048272028

 

 

I think there is a lot to learn about Li Lu as an investor however it's hard to track his portfolio.

 

 

Is he meanly holding cash since 30-06-2017?

 

 

https://fintel.io/i13fs/himalaya-capital-management

 

 

Thank you for the information.

Link to comment
Share on other sites

The 13-F only tracks US Listings and shows he held only Alibaba and Baidu stocks traded in the US in unchanged quantities at 30 SEP 2018. It is not intended to disclose holdings to track portfolios - this is merely a side effect of the disclosures.

 

It's clear that the BYD stake for example is held in Hong Kong or another Chinese market like Berkshire's and will not appear in 13-F filings

Link to comment
Share on other sites

  • 4 months later...

In any case, it wont harm you to revisit Dynamic's post of January 25th 2019.

 

I did find a site (click here) listing both Himalaya and Berkshire Hathaway Holdings of BYD on Hong Kong along with BYD's two main executives who held it in Shenzhen exchange so for completeness I will change the ticker I use in teaching Berkshire's holding.

 

The double listing made the site corrupt the percentages but the share counts matched other sources I found so I guess it's probably accurate. Maybe it's possible to check other suspected holdings to see if Himalaya Capital is listed as a major holder.

Link to comment
Share on other sites

In searching EDGAR, we have:

Himalaya Capital Management LLC whose last 13F-HR filing was on 14th Nov 2018 for the period ending 30th Sep 2018.

It shows $10m of holdings in Baidu (5,800 shares, worth $1.326m) and AliBaba (53,000 shares, worth $8.732m). The number of shares matches the previous quarter's holdings too.

 

There has not been a filing from them since then, which might imply that they no longer hold these securities and are now exempt from filing... or perhaps they're exempt from filing for another reason:

 

According to the 13F FAQ from the SEC:

Question 2

Q: Who must file Form 13F?

A: Institutional investment managers that use the United States mail (or other means or instrumentality of interstate commerce) in the course of their business and that exercise investment discretion over $100 million or more in Section 13(f) securities must file Form 13F. See Section 13(f)(1) of the Securities Exchange Act.

 

Clearly, Himalaya is well below the $100 million threshold in Section 13(f) securities, even if they still hold the same Alibaba and Baidu stocks (which both remain on the current list of 13F securities), as their BYD holding is Hong-Kong listed and exempt from 13F.

 

The 13F-HR filed for 2017Q4 reported $7m of stocks, 2017Q3 had nearly $8m, 2017Q2 nearly $6m, 2017Q1 nearly $118m, and 2016Q4 nearly $112m (Baidu Inc and Sina Corp - possibly this having been granted confidential treatment as it was published on 14th June 2017, the same date as for 2017Q1 which showed the same holdings)

 

Question 28 says you must start filing for the December quarter in the year you first exceed $100m at the end of a month then continue filing form 13F and will need to continue for March, June and September even if you fall below the $100m threshold:

Question 28

Q: When should I file if I just reached the $100 million filing threshold?

A: You generally should file your first Form 13F for the December quarter of the calendar year during which you first reach the $100 million filing threshold. You subsequently will need to submit filings for the March, June, and September quarters of the following calendar year, even if the market value of your Section 13(f) securities falls below the $100 million level. See Rule 13f-1(a)(1) under the Securities Exchange Act.

 

Question 29

Q: Can you give me an example?

A:

Yes. Assume that you first meet the $100 million filing threshold on the last trading day of July 1999. See Rule 13f-1(a)(1) under the Securities Exchange Act. Your first Form 13F should have been filed for the quarter ended December 1999, and was due no later than February 14, 2000. At the appropriate time, you also should have submitted filings for the March, June, and September 2000 quarters.

 

The market value of your portfolio of Section 13(f) securities during the calendar year 2000 determined whether or not you were required to file a Form 13F for the quarter ended December 31, 2000. You were required to file a Form 13F for the calendar quarter ended December 31, 2000 — and the calendar quarters ended March 31, 2001, June 30, 2001, and September 30, 2001 — if you met the $100 million filing threshold on the last trading day of at least one month during the year 2000.

 

So I imagine that once they knew their 13F would become public, they decided for proprietary advantage to fairly quickly reduce their exposure to 13F securities to well below $100m. As they had exceeded $100m for at least one month-end in 2017 (March at least), they would have to file 2017Q4, and the first three quarters of 2018, but could then cease filing, their last 13F-HR report having to be filed on 14th Nov 2018.

 

Also Question 25 specifies the dates of filings:

What Is the Filing Deadline?

Question 25 (Updated: March 15, 2017)

Q: When must I file Form 13F?

A:

The first such filing is due within 45 days after the end of the fourth quarter of the calendar year, i.e., the quarter ending December 31 of the same calendar year that you meet the $100 million filing threshold. The filing is due within 45 days after December 31, or, stated differently, by February 14 of the subsequent calendar year.

 

Rule 13f-1(a)(1) also requires that you submit three additional Form 13F filings during the subsequent calendar year.  Each filing is due within 45 days after the end of the calendar quarter, i.e., the calendar quarters that end on March 31, June 30, and September 30. See Rule 13f-1(a)(1) under the Securities Exchange Act, and General Instruction 3 to Form 13F [Adobe Acrobat® (PDF) file].

 

The Form 13F filing deadlines for the quarters that end in the calendar years 2017-19 are:

 

{deletia...}

 

4Q 2018  (December)

 

February 14, 2019  (Thursday)

 

1Q 2019  (March) 

 

May 15, 2019  (Wednesday)

 

2Q 2019  (June)

 

August 14, 2019  (Wednesday)

 

3Q 2019  (September)

 

November 14, 2019  (Thursday)

 

4Q 2019  (December)

 

February 14, 2020  (Friday)

 

When the filing deadline falls on a Saturday, Sunday or a holiday, then your filing is due on the first business day thereafter. See Rule 0-3(a) under the Securities Exchange Act. Under Rule 13f-1(a)(1), for example, the December 31, 2014 Form 13F report was due no later than February 14, 2015, a Saturday. Applying Rule 0-3(a), the filing deadline there was pushed forward to Monday, February 16, 2015, but because that day was a holiday (Presidents' Day), the Form 13F filing deadline for the quarter ended December 31, 2014 was Tuesday, February 17, 2015.

 

Your Form 13F filing obligation will continue as long as you continue to meet the $100 million filing threshold set forth in Rule 13f-1(a)(1).

 

A few other interesting items:

Question 40

Q: Do I include securities of foreign issuers on Form 13F?

A:

You report shares of a foreign issuer only if those shares are traded on a United States exchange (e.g., NYSE, AMEX) or are quoted on the NASDAQ National Market System (this excludes "pink sheet" ADRs). As always, you should rely on the Official List of Section 13(f) securities to determine what should and should not be included on your filing.

 

Shares of securities that trade on non-United States exchanges (e.g., Toronto Stock Exchange, London's FTSE, Tokyo's Nikkei) should not be reported on Form 13F.

 

Question 41

Q: What about short positions?

A: You should not include short positions on Form 13F. You also should not subtract your short position(s) in a security from your long position(s) in that same security; report only the long position.

 

What About Confidential Treatment?

Question 52 (Updated: August 2, 2013)

Q: When is confidential treatment available?

A:

See Section 13(f)(4) and (5) and Confidential Treatment Instructions 1-4 to Form 13F [Adobe Acrobat® (PDF) file].

 

Section 13(f)(4) of the Securities Exchange Act states that the Commission shall not disclose Form 13F information that identifies securities held by a natural person, an estate, or a personal trust (excluding business trusts or investment companies). We refer to this category of confidential information as the personal holdings exemption.

 

Section 13(f)(4) also states that the Commission may prevent or delay public disclosure of Form 13F information for public interest reasons or the protection of investors. This must be done, at a minimum, in accordance with one of the nine limited exemptions from public disclosure that are set forth in the Freedom of Information Act. See 5 U.S.C. § 552, available at http://www.gpo.gov.  The substantive rationale for a commercial exception from FOIA, such as an institutional investment manager’s request for confidential treatment of an investment position(s), typically falls under FOIA Exemption 4, which protects "trade secrets and commercial or financial information obtained from a person and privileged or confidential." See 5 U.S.C. § 552(b)(4), available at http://www.gpo.gov.  Another FOIA exemption(s) may apply to a request that is based on a different rationale for confidentiality.

 

Section 13(f)(5) of the Securities Exchange Act additionally provides that, in order to grant confidential treatment under section 13(f), the Commission must determine that such action is necessary or appropriate in the public interest and for the protection of investors or to maintain fair and orderly markets.

 

Question 58

Q: What is the impact of EDGAR filing on requests for confidential treatment?

A:

See Confidential Treatment Instruction 4 to Form 13F [Adobe Acrobat® (PDF) file], and Rule 13f-1(a)(2) under the Securities Exchange Act.

 

You must file an amendment to your public Form 13F whenever your request for confidential treatment is denied by the Commission or when confidential treatment that was previously granted by the Commission expires. Amendments must be filed electronically, via EDGAR, within six business days of the denial of a confidential treatment request or the expiration of confidential treatment.

 

To amend a public filing, you must number the amendment on the Cover Page, and specify that it adds entries for new holdings to your public Form 13F. You must include the following legend at the top of your Form 13F Cover Page:

 

THIS FILING LISTS SECURITIES HOLDINGS REPORTED ON THE FORM 13F FILED ON (DATE) PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FOR WHICH (THAT REQUEST WAS DENIED / CONFIDENTIAL TREATMENT EXPIRED) ON (DATE).

Link to comment
Share on other sites

  • 8 months later...
  • 5 months later...

It is interesting how often I am hearing the FANG stocks are overvalued, yet smart very value conscious people such as Li Lu have recently bought. If anyone as any thoughts on this I’d be very interested in hearing them. It seems to me like the actions of people who I greatly respect contradict what seems to be the general consensus. Below is a link to Himalaya capitals recent 13f showing his recent FB and GOOG buys. Thank you!

 

 

https://whalewisdom.com/filer/himalaya-capital-management-llc

 

Link to comment
Share on other sites

These are the two fangs I own.  Here are my thoughts for what it's worth.

 

FB:  Facebook, Instagram and Whatsapp are all companies that benefit from network effects, which are hard to disrupt when they get big enough (like now).  It's like why everyone hated Microsoft but everyone already used it, so everyone else had to use it.  Assume it's better to drive on the left side of the road, how do you get everyone to do it unless everyone is already doing it?  FB can sell ads at a premium because they know so much about you and unlike a traditional ad spend, the ads (like on Google) are auction driven so the ad platform keeps more of the value created.  It's trading at not a lot more than the P/E of the market for a company that has way better prospects than the rest of the market.

 

GooG:  Google and YouTube are the number 1 and 2 search engines in the world.  15% of all internet traffic is YouTube.  If you sell ads on the best search engines, you are getting an override on the growth of internet traffic and e-commerce.  Also, most of the moonshots are not that impressive but self-driving is.  Everyone looooves tesla because of the self driving potential, but based on two important metrics (miles driven, and avg miles driven before you need to grab the streering wheel) GM is number two and number one is....Google.  And again, the P/E is not outrageous compared to the market 

 

I think Amzn and Netflix are great products, just could never get comfortable with the price.

 

Apple:  I looked at it before Buffett and (wrongly) concluded that it was a bad idea because (at the time) 65% of the revenue was from iphones and I'm old enough to remember when everyone had a motorola razr, and then a blackberry, and then a nokia.  I will say that (last time I checked) I was impressed with their cash situation.  They move product so quickly and get paid so fast, but pay others so slow, that the metric you use for that (i forget what it's called) was negative 40 days.  I've never seen that before.  But...I didn't buy it.  I'm chickensh1t. 

Link to comment
Share on other sites

It is interesting how often I am hearing the FANG stocks are overvalued, yet smart very value conscious people such as Li Lu have recently bought. If anyone as any thoughts on this I’d be very interested in hearing them. It seems to me like the actions of people who I greatly respect contradict what seems to be the general consensus. Below is a link to Himalaya capitals recent 13f showing his recent FB and GOOG buys. Thank you!

 

 

https://whalewisdom.com/filer/himalaya-capital-management-llc

 

I think that entire 13F is less than 10% of what Himalaya manages.  Yes, they own it.  But not to the degree of concentration that the 13F may lead you to.

Link to comment
Share on other sites

It is interesting how often I am hearing the FANG stocks are overvalued, yet smart very value conscious people such as Li Lu have recently bought. If anyone as any thoughts on this I’d be very interested in hearing them. It seems to me like the actions of people who I greatly respect contradict what seems to be the general consensus. Below is a link to Himalaya capitals recent 13f showing his recent FB and GOOG buys. Thank you!

 

 

https://whalewisdom.com/filer/himalaya-capital-management-llc

I think that entire 13F is less than 10% of what Himalaya manages.  Yes, they own it.  But not to the degree of concentration that the 13F may lead you to.

 

Do have a source for Himalaya being >$10b?

 

Link to comment
Share on other sites

It is interesting how often I am hearing the FANG stocks are overvalued, yet smart very value conscious people such as Li Lu have recently bought. If anyone as any thoughts on this I’d be very interested in hearing them. It seems to me like the actions of people who I greatly respect contradict what seems to be the general consensus. Below is a link to Himalaya capitals recent 13f showing his recent FB and GOOG buys. Thank you!

 

 

https://whalewisdom.com/filer/himalaya-capital-management-llc

I think that entire 13F is less than 10% of what Himalaya manages.  Yes, they own it.  But not to the degree of concentration that the 13F may lead you to.

 

Do have a source for Himalaya being >$10b?

 

Just useless rumors and speculations on the internet

Link to comment
Share on other sites

These are the two fangs I own.  Here are my thoughts for what it's worth.

 

FB:  Facebook, Instagram and Whatsapp are all companies that benefit from network effects, which are hard to disrupt when they get big enough (like now).  It's like why everyone hated Microsoft but everyone already used it, so everyone else had to use it.  Assume it's better to drive on the left side of the road, how do you get everyone to do it unless everyone is already doing it?  FB can sell ads at a premium because they know so much about you and unlike a traditional ad spend, the ads (like on Google) are auction driven so the ad platform keeps more of the value created.  It's trading at not a lot more than the P/E of the market for a company that has way better prospects than the rest of the market.

 

GooG:  Google and YouTube are the number 1 and 2 search engines in the world.  15% of all internet traffic is YouTube.  If you sell ads on the best search engines, you are getting an override on the growth of internet traffic and e-commerce.  Also, most of the moonshots are not that impressive but self-driving is.  Everyone looooves tesla because of the self driving potential, but based on two important metrics (miles driven, and avg miles driven before you need to grab the streering wheel) GM is number two and number one is....Google.  And again, the P/E is not outrageous compared to the market 

 

I think Amzn and Netflix are great products, just could never get comfortable with the price.

 

Apple:  I looked at it before Buffett and (wrongly) concluded that it was a bad idea because (at the time) 65% of the revenue was from iphones and I'm old enough to remember when everyone had a motorola razr, and then a blackberry, and then a nokia.  I will say that (last time I checked) I was impressed with their cash situation.  They move product so quickly and get paid so fast, but pay others so slow, that the metric you use for that (i forget what it's called) was negative 40 days.  I've never seen that before.  But...I didn't buy it.  I'm chickensh1t.

 

I have seen buys from value legends at FB and Google, though some have trimmed in the recent quarter.  However, almost in all cases except Sequoia Fund (GOOG), Berkshire (AAPL), and a few others, these investments are relatively small compared to total AUM.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...