Himalaya Capital
| Company type | Private |
|---|---|
| Industry | Investment management |
| Founded | 1997 |
| Founder | Li Lu |
| Headquarters | Seattle , United States |
Area served | Asia |
Key people | Li Lu (Founder) |
| Products | Value investing funds, primarily long-only investments in Asian markets |
Number of employees | 19 (2024) |
Himalaya Capital (Himalaya) is a United States-based investment management company with its headquarters situated in Seattle, Washington. Established in 1997 by Li Lu, an entrepreneur often referred to as the "Chinese Warren Buffett", Himalaya concentrates on value investing, primarily targeting Asian markets, with a strong emphasis on China.
Background
After spending a year at Donaldson, Lufkin & Jenrette, Li Lu launched Himalaya as a solo hedge fund in New York City. The firm faced early challenges due to the 1997 Asian financial crisis, recording a 19% loss and losing significant investors. Nevertheless, through strategic purchases of distressed securities in Japan and Korea, the company rebounded, increasing its assets under management (AUM) to about $100 million by the mid-2000s and expanding its team.
Although Li played a prominent role in the 1989 Tiananmen Square protests, he redirected his efforts toward long-term investments within China. In 2002, Himalaya made a pivotal investment in BYD Company shortly after its initial public offering, placing confidence in China's manufacturing capabilities and massive consumer base of 1.4 billion people. This investment became a foundational element of Himalaya’s portfolio.
That same year, investor Julian Robertson offered capital with stipulations allowing both long and short positions, but Li declined the offer, preferring to maintain a strictly long-only investment strategy. In 2003, Li encountered Berkshire Hathaway vice-chairman Charlie Munger, whose influence prompted Himalaya's shift from hedge fund operations to a value-centric long-only investment approach. Munger committed $88 million under the condition that the fund would remain closed to new investors; this capital appreciated to approximately $400 million, demonstrating robust returns.
By 2004, Himalaya introduced a new fund seeded with $4 million from Li himself alongside substantial contributions from Munger and other backers. The portfolio prominently features holdings in BYD Company and Kweichow Moutai. Munger has publicly recognized Li as his sole trusted external manager and bestowed upon him the title "Chinese Warren Buffett."
In 2007, Himalaya moved its offices to Pasadena to be closer to Munger, later relocating to Seattle in 2018 to benefit from tax efficiencies. Li regained access to China in 2010 and accompanied notable investors such as Bill Gates and Warren Buffett on visits to BYD, while also engaging with Chinese enterprises and academic circles regarding value investing principles.
By 2010, Himalaya had secured an annualized compound return of 26.4% since inception, significantly outperforming the S&P 500’s 2.25%. In July 2021, Himalaya divested 10.8 million BYD Company H shares for a profit of US$309 million, trimming its holding to 6% of the overall portfolio.
As of March 2024, Himalaya oversees roughly US$15 billion in assets with a streamlined team of 19 employees, sustaining a focused investment strategy centered on Asia’s expanding markets under the guidance of Li Lu.
Corporate affairs
Himalaya employs a value investing methodology influenced by Benjamin Graham, Warren Buffett, and Charlie Munger. Founder Li Lu prioritizes "accurate and complete information," often performing comprehensive research on company leadership to guide investment choices.
The firm’s structure is modeled after Berkshire Hathaway’s framework, featuring analyst teams assigned to specific companies who report directly to Li, who retains final authority over investment decisions. Himalaya operates discreetly, drawing capital predominantly from a stable group of high-net-worth investors and pension funds, many of whom participate annually in Berkshire Hathaway’s meeting in Omaha. A significant portion of Li’s personal fortune is invested within Himalaya.
As of 2020, Himalaya refrains from charging management fees or fees on returns below six percent, reflecting its distinctive business philosophy focused on aligning interests with investors and fostering sustained growth.