Himalaya Capital Management

#### I. Institutional Overview Himalaya Capital Management, led by the venerable Li Lu, represents one of the most disciplined and concentrated expressions of value investing in the modern era. As we dissect the 13F filing for the fourth quarter of 2025, we are looking at a portfolio that is the antithesis of the "closet indexing" prevalent in many institutional circles. With a reported value of approximately **$3.57 billion** and a portfolio consisting of only **9 holdings**, Li Lu continues to demonstrate a "punch card" philosophy—a concept famously advocated by Warren Buffett and Charlie Munger, where an investor acts as if they only have twenty investment slots for their entire lifetime. The psychological portrait of Himalaya Capital this quarter is one of **unwavering conviction and surgical precision**. In an era of high-frequency trading and algorithmic volatility, Li Lu’s portfolio remains a bastion of long-term thinking. The fact that the institution manages over $3.5 billion across fewer than ten stocks indicates a massive level of trust in their fundamental research. This is not a manager who seeks to "track" the market; this is a manager who seeks to own the highest-quality businesses at prices that offer a significant margin of safety, regardless of short-term price fluctuations. Analyzing the scale trend, the portfolio value of **$3,568,876,223** reflects a stable yet powerful capital base. While the number of stocks remains extremely low (9), the concentration is breathtaking. The top five holdings alone account for the vast majority of the AUM, suggesting that Li Lu is comfortable with idiosyncratic risk as long as the underlying business moats are widening. This quarter, we see a slight expansion in the "investable universe" with the addition of a new position, yet the overall strategy remains one of "fat pitches." Li Lu is waiting for the perfect opportunity to swing, and when he does, he swings with significant capital. The institutional style is clearly "Value-Driven Growth." Although Li Lu is often categorized strictly as a value investor, his holdings in companies like Alphabet and PDD Holdings suggest a deep appreciation for "compounders"—businesses that can reinvest capital at high rates of return over long periods. The psychological state of the firm appears to be **patiently opportunistic**. They are not afraid to hold large cash-like positions (represented by Berkshire Hathaway) or to maintain massive stakes in banking giants like Bank of America, which serve as the bedrock of the portfolio. In summary, Himalaya Capital’s Q4 2025 report reveals an institution that is doubling down on its core circle of competence while making highly selective forays into new consumer-facing opportunities. The "psychological portrait" is that of a master hunter: quiet, observant, and extremely decisive when the right target appears. This report is not just a list of stocks; it is a testament to the power of concentration and the courage to hold a non-consensus, highly focused portfolio in a world of diversification. #### II. Sector Allocation Analysis The sector allocation of Himalaya Capital is a direct reflection of Li Lu’s macro-economic outlook and his preference for businesses with "toll-bridge" characteristics. Unlike many diversified funds that spread assets across all eleven GICS sectors, Himalaya is concentrated in just five, with two sectors—**Communication Services** and **Financials**—commanding a staggering **81.32%** of the total portfolio. | Sector | Weight (%) | Trend | | :--- | :--- | :--- | | Communication Services | 43.86 | Stable/High | | Financials | 37.46 | Stable/Core | | Consumer Discretionary | 16.15 | Increasing | | Energy | 1.69 | Decreasing | | Technology | 0.84 | Residual | **2.1 Concentration Analysis: The Power of the Few** The top three sectors (Communication Services, Financials, and Consumer Discretionary) represent **97.47%** of the portfolio. This level of concentration is almost unheard of for a multi-billion dollar fund. It indicates a macro judgment that these specific areas of the economy offer the best risk-adjusted returns in the current environment. By eschewing sectors like Utilities, Real Estate, or Materials, Li Lu is signaling that he finds little "alpha" or safety in those capital-intensive or highly regulated industries at current valuations. **2.2 Communication Services: The Digital Infrastructure Bet** At **43.86%**, Communication Services is the crown jewel of the portfolio. This weight is almost entirely driven by the massive position in **Alphabet (GOOG/GOOGL)**. From a macro perspective, this suggests Li Lu views high-quality digital advertising and cloud infrastructure as the "new utilities" of the 21st century. Despite the rise of various AI competitors, the allocation shows a firm belief in the enduring moat of search and the structural growth of the digital economy. The slight rebalancing between Class A and Class C shares this quarter does not change the fundamental thesis: the digital gateway remains the most attractive place to park nearly half of the firm's capital. **2.3 Financials: The Bedrock of the Real Economy** The **37.46%** allocation to Financials, primarily through **Bank of America (BAC)**, **Berkshire Hathaway (BRK.B)**, and **East West Bancorp (EWBC)**, serves as a bet on the resilience of the American and global financial systems. In a Q4 2025 context, this suggests that Himalaya Capital is comfortable with the interest rate environment and the credit quality of major lenders. Bank of America provides exposure to the broad consumer and corporate lending market, while East West Bancorp offers a unique bridge for trade and commerce. Berkshire Hathaway, meanwhile, acts as a "fortress" holding, providing diversified exposure to insurance, energy, and rail, while maintaining a massive cash pile that Li Lu likely views as an indirect way to participate in future market dislocations. **2.4 Consumer Discretionary: The Growth Engine** The **16.15%** allocation to Consumer Discretionary is particularly interesting this quarter. It is dominated by **PDD Holdings** and the new addition of **Crocs (CROX)**. This sector represents the "offensive" side of the portfolio. By investing in PDD, Li Lu is capturing the shift in global e-commerce dynamics and the rise of ultra-efficient supply chains. The addition of Crocs suggests a tactical move into a high-margin, brand-strong consumer staple disguised as a discretionary item. This sector's weight indicates a belief that despite macro headwinds, specific consumer platforms with extreme value propositions (like PDD) or strong brand loyalty (like Crocs) can continue to gain market share. **2.5 Macroeconomic Judgment and Industry Trends** The near-total absence of "Technology" (only **0.84%** via Apple) is a striking macro signal. While Alphabet is technically Communication Services, it is a tech giant. However, by avoiding the broader "Information Technology" sector (software, semiconductors, hardware), Li Lu may be signaling a wariness toward the extreme valuations found in the AI-driven tech rally of 2024-2025. He prefers the "platforms" (Alphabet, PDD) over the "tools" (Nvidia, Microsoft). Furthermore, the reduction in **Energy (1.69%)** via the exit of Sable Offshore Corp and the stagnant position in Occidental Petroleum suggests a cooling of the "inflation hedge" thesis. While Li Lu remains in OXY, the lack of new capital flowing into energy indicates a shift toward businesses with higher capital efficiency and less reliance on commodity price cycles. #### III. Top 10 Holdings Deep Dive Since Himalaya Capital only holds 9 stocks, this "Top 10" analysis covers the entirety of the firm's public equity exposure. Each position is a significant commitment of capital and reflects a deep-seated bel ---