Charlie Munger’s favorite investor is betting big on a stock getting crushed by US tariffs

In its second-quarter 2026 13F filing with the SEC, Li Lu’s Himalaya Capital Management disclosed it raised its position in PDD Holdings Inc, the Chinese company behind Pinduoduo and Temu. 

Himalaya Capital Management increased its PDD stake by 133.5%. The fund bought 6.15 million additional shares at an average price of $92.32. 

The move comes as PDD faces pressure from US trade policies, an investigation in Europe and rising costs at home. 

PDD becomes one of Himalaya’s biggest bets 

PDD shares traded between $73.30 and $104.79 during the quarter. After the latest purchase, PDD accounted for 22.17% of Himalaya Capital’s $3.7 billion US equity portfolio. That makes it the fund’s third-largest holding.

Alphabet’s two share classes remain the biggest positions, together making up almost half of the portfolio. Alphabet Class A accounts for 24.55%, while Class C makes up 23.39%.

Berkshire Hathaway is the next major holding at 14.98%, followed by East West Bancorp at 9.68%.

Himalaya’s portfolio gets much smaller 

The PDD purchase comes as Himalaya has sharply reduced the number of stocks in its disclosed portfolio. The fund held 14 stocks previously but now has just eight.

That fits with Li Lu’s investment style. He has long preferred putting large amounts of money into a small number of companies that he believes he understands well, rather than spreading investments across a large number of stocks.

Li Lu has often been compared with Warren Buffett and is sometimes called the “Chinese Warren Buffett”. His close association with Charlie Munger has also brought him considerable attention among value investors. 

Munger once described Li Lu as one of the few people he would trust with money without needing to ask many questions. 

Why is Li Lu buying PDD now? 

The timing of the investment is interesting because PDD is facing several challenges.

One of the biggest is US trade policy. Changes to the de minimis exemption for low-value imports have created problems for Temu, whose business model depends heavily on sending low-cost products directly from sellers to consumers in the US.

PDD is also dealing with regulatory pressure in Europe.

The European Commission is investigating Temu over how it handles illegal or non-compliant products on its marketplace. The investigation adds another layer of uncertainty for the company.

There is also pressure on PDD’s margins in China.

Trump wins legal battle to keep cheap imports subject to tariffs

This week, a US trade court gave Trump a legal win, ruling that his administration can continue charging duties on low-value imports, including packages sent by Chinese shopping platforms Temu and Shein.

The Court of International Trade said the administration can keep the suspension of the so-called de minimis exemption in place. The rule had allowed packages worth $800 or less to enter the US without customs duties. 

The decision is a boost for Trump’s trade policy, which suffered a major legal setback earlier this year. That ruling forced his administration to look for other legal grounds to keep some of its tariffs in place.

Trump celebrated the ruling on social media soon after the decision.

He said the old system had allowed foreign companies to send huge numbers of packages into the US without paying tariffs. Trump called it a loophole used by “Tariff Cheats” and said it had also been exploited by fentanyl traffickers, counterfeiters and other criminals. US Customs and Border Protection has said the suspension of the exemption brought in about $1 billion in duties in 2025.

The three-judge panel unanimously ruled in Trump’s favour. The judges found that IEEPA gives the president the power to cancel certain “privileges.” They also noted that the law governing de minimis treatment itself uses that same word when describing the duty-free benefit.

A value bet despite the risks 

For Li Lu, however, the problems surrounding PDD may be part of the reason to buy.

PDD has continued to report double-digit year-on-year revenue growth through early 2026, while its shares have fallen by double digits this year.

Analysts have valued the company at around 9 to 12 times forward earnings, according to the source material, well below many US technology companies. That means investors are placing a lot of weight on the risks around tariffs, regulation and weaker margins.

Li Lu appears to be taking the other side of that argument, betting that the underlying PDD business remains strong enough to justify a much larger position.

PDD has become a key stock for investors watching US-China trade relations, as changes in tariffs and de minimis rules can quickly affect Temu’s business. The European Commission’s investigation adds to the pressure on the company. 

PDD’s second-quarter results, due on August 25, will show how these challenges are affecting its business and profits. Investors will also watch the impact of its heavy spending on supply chains and new brands. For now, Li Lu’s bigger bet suggests he still sees strong long-term value in PDD despite the risks. 

The Munger connection

Li Lu’s reputation in value investing is closely tied to his relationship with Charlie Munger. The two met at a Thanksgiving lunch in 2003, and Munger was impressed enough to trust Li Lu with $88 million of his family’s money when Li started Himalaya Capital’s fund in 2004. It was reportedly the only time Munger gave money to an outside investment manager.

Munger’s advice to Li was simple: focus on long-term value, rather than short-term trading. The bet paid off. By 2023, Munger said the $88 million had grown to around $400 million, describing the returns as “unholy good.”

Li Lu also played a role in one of Berkshire Hathaway’s biggest investments. He had bought BYD as early as 2002, and his confidence in the Chinese automaker helped convince Munger to push Warren Buffett towards Berkshire’s $230 million investment in BYD in 2008. The company later grew into the world’s largest EV maker by sales.

That track record helped earn Li Lu the nickname “Chinese Warren Buffett.”

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.