A look into Munger and Li Lu's life & investment process Part 3

Here are some of the investments which Li Lu made which I know of, which may be wrong, since I'm not an investor in Himalaya capital, and while I have been to some of the AGMs of these companies, it doesn't necessarily mean I know everything about Himalaya. In no way is this post meant to tarnish or reveal any of his holdings and this post does not reflect his investment philosophy, it is just my attempt to pick apart his thinking.

Summary:

CRRC - China's highspeed rail projects which pits them against GE and Bombardier, with projects abroad and domestic, the scale will only increase with the one belt, one road initiative. But how big can this get despite growth? Is this a place for Li Lu to park cash?

Shanghai Pudong Airport - If you've traveled to Shanghai, you know that there's only Pudong and HongQiao Airport. HongQiao's area is constraint due to law as it would interfere with residential area. The traffic flow from international and domestic flights will only increase.

Fuyao Glass - If you haven't seen CaoDeWang's netflix documentary American Factory, or the clip on youtube on Vice channel you should see it. Fuyao benefits from double the gross margins of the glass industry, but they are only focused on autoglass. PPG had a similar advantage, but they are moving away from glass and into coating technology.

BYD - BYD has significant marketshare in the lithium ion battery category, and it helps that they started being a battery manufacturer before they did automobiles. The most expensive component for EVs is the battery, and Tesla has to maintain a good relationship with Panasonic since it doesn't produce its own batteries.

GweiZhou Mao Tai - I am assuming Li Lu has sold Mao Tai. Mao Tai use to be inferior to WuLiangYe and was priced lower than them 2 decades ago, but has undergone changes in its distribution and has managed to infiltrate into the elite group of businessmen and CCP.

Ottogi - Before Ottogi, I knew of NongShin, I didn't know that there was a sauce and noodle maker that sold at a low price to dominate the entire market.

Amore Pacific - Amore Pacific owns an assortment of cosmetic brands and has benefited from their expansion into China.

Timberland - One of Li Lu's earlier investments mentioned in his Columbia lectures.

Hyundai Department Store

Unsure:
WH Group - A meat processing company that has dominated the Chinese market and bought up U.S meat producer Smithfield.
Inner Mongolia Yili - A dairy product company
Shanghai Yunnan Baiyao - A very famous Chinese brand of medicine
Gree Electric Appliances
State Power
Posco Steel- Posco is in Korea. Korea doesn't have iron ores, yet it is still able to export due to its efficient processes of producing steel and superior logistics. When the ships arrive, they drop off the raw materials, and on the U-turn, they collect the finished products.

One thing that is similar with all these companies is that they all eventually gained a significant amount of market share and dominated their specific geographies. So they definitely had a sustainable competitive advantage. Li Lu also bought at the inflection point, when most of these advantages accrued and was about to be reflected in the stock price. Another thing is that most of these companies had near double digit return on capital and the debt was manageable.