Charlie Munger’s Belridge Oil Investment

At the 2019 Berkshire Hathaway shareholder meeting, Charlie Munger described Belridge Oil as the greatest investing mistake of omission of his life. In 1977, he bought 300 shares of the stock for $115 per share. At the time, Munger described it as the most undervalued stock in the world, with his calculation of intrinsic value finding that the stock was worth somewhere in the thousands of dollars.

Later that year, he was offered the opportunity to buy 1500 shares of the stock at the same price. Munger declined, leery of committing to a stock whose CEO was a dysfunctional drunk (though as Munger later recounted, though the CEO had a drinking problem, the Belridge oil wells didn’t).

In 1979, the Belridge CEO put the company on the auction block for sale in a bidding war between Mobil Corporation, Texaco, and Shell. Ultimately, Shell was the high bidder at a price … Read the rest of this article!