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年前，李路是天安门广场上抗议活动中的学生领袖，现在则是一名对冲基金经理，他有望成为巴菲特（Warren Buffett）在伯克希尔哈撒韦公司（Berkshire Hathaway Inc.）的继任者。今年44岁的李路成为运营伯克希尔哈撒韦1000亿美元中多数投资组合的主要候选人，这源于他与该公司86岁的副董事长芒格（Charlie Munger）的挚友关系。在采访中，芒格透露李路可能成为伯克希尔哈撒韦负责投资的高管之一。芒格说，在我看来，这是预料中的事情。
相关报导
这一进展说明伯克希尔哈撒韦正在推进继任计划的某些方面，此举可能早于投资者们的预期。
David Yellen
由左至右：中美能源控股董事长索科尔，巴菲特，比亚迪的王传福和李路
李路在华尔街的晋升非常富有戏剧性：文化大革命期间他父母被送去劳改后，他的童年时代是在寄养家庭中辗转度过的。天安门事件后，他逃到法国，然后去了美国。他对冲基金里的投资者包括美国企业一些资深高管及音乐人Sting，后者认为李路“工作勤奋又聪明。”
李路的投资策略与巴菲特明显不同：李路主要投资亚洲高科技企业，但巴菲特通常对他不了解的行业不投资。
巴菲特表示，伯克希尔哈撒韦的核心投资工作可以由两个或两个以上经理管理，他们地位一样，为伯克希尔哈撒韦1000亿美元的投资组合负担不同的职责。索科尔（David Sokol）是公司旗下中美能源控股公司（MidAmerican Energy Holdings）的董事长，人们认为他是首席执行长的头号竞争者。今年53岁的索科尔于1991加入中美能源控股，以工作不知疲倦闻名。
在采访中，巴菲特拒绝直接评论继任计划。但他并不排除在他仍在为伯克希尔哈撒韦掌舵期间，引入李路这样的投资经理。
巴菲特说，我喜欢在我仍在这个岗位的时候引入其他投资经理的这个想法。他说不会排除今年作出这样的举动，但他补充说，也没有为很快补充投资经理设定“目标”。巴菲特说，他想象这是一个团队，伯克希尔哈撒韦的投资高管作为一个团队接受报酬，他说，我不希望他们竞争。
巴菲特说，李路在许多重要方面适合这一职位。他说，你希望有人能够在新问题还没有发生前就未雨绸缪。李路是一个逆向投资者，在比亚迪股票遭打压下跌的时候，他买入了该股。另外他还是伯克希尔哈撒韦的忠实粉丝，这或许也可以帮助他的事业。巴菲特说，除非他们对伯克希尔哈撒韦有特殊的感情，否则我们不会雇佣他们。
但聘用李路可能有风险，他对比亚迪的大量押注是他唯一一次大规模投资的全胜记录，如果没有比亚迪的获利，他作为对冲基金经理的表现则乏善可陈。
如果让他管理伯克希尔哈撒韦的一个大规模投资组合，他是否能获得这样的利润，这仍是个未知数。
更重要的是，他的战略是进行大笔投资，在市场下滑时也毫不动摇，这种战略可能会在漫长的熊市中产生事与愿违的效果。尽管2009年获得了200%的回报，截至今年6月底前，他管理的投资组合已经缩水13%，是同期标准普尔500指数6.6%跌幅的近两倍。
李路拒绝讨论在伯克希尔哈撒韦的可能任职，只是说能成为伯克希尔哈撒韦内部圈子的一份子，他感到很幸运。他说，这是你做梦也想像不到的。
李路出生于1966年文革开始的那一年。他说，他九个月大时，他当工程师的父亲被送到了一个煤矿接受“再教育”。他的母亲被送到了一个劳改所。李路的父母向很多家付钱，希望他们照顾他。有好几年，他都在好几个家庭之间辗转，直到到了家乡唐山一个文盲矿工的家里。他和这个矿工建立了深厚的感情。李路说，小小年纪就与家人分离，这教会了他生存的技能。
十岁后，他与父母和两个兄弟重新团聚。当时他的家乡唐山发生了一场大地震，造成约24.2万人遇难，其中包括照顾他的矿工一家。他说，他们家在地震中幸免，不过他认识的大部分人都死了。
李路说，当时他没有方向，在街上打架斗殴。他说，他的祖母激励他开始读书学习。他的祖母是她们市里第一批女大学生之一。李路后来上了南京大学，专业是物理。
1989年4月，他到北京天安门广场遇到了在那里集会悼念胡耀邦的学生。胡耀邦被视为是一个民主与改革的支持者。
学生们抗议腐败等问题，李路参与了学生的组织工作，并参加了绝食。
他和其他学生后来逃往法国。1989年晚些时候，他到了美国，在哥伦比亚大学发表演讲。那里的人权活动人士像迎接英雄一样地迎接了他。他不太会说英语，不过却收到了一笔写书的预付款，书的内容是关于他自己经历的。
在哥伦比亚大学奖学金的帮助下，李路迅速学会了英语。据哥伦比亚大学说，他成了该校第一批同时获得三个学位的学生之一：经济学、法学和商业硕士学位。
在李路的学生贷款不断增加之际，1993年他听了巴菲特在哥伦比亚大学的一次讲座。当时，90年代的牛市正如火如荼，对冲基金在上升阶段。李路说，在中国，他不相信金融市场，不过听过巴菲特的讲座之后，帮助他克服了对股市投资的质疑。
他开始用写书的预付款投资股市。1996年毕业前，他已经有了相当规模的储蓄，他说他觉得自己可以退休了。然而，他接受了证券公司帝杰(Donaldson Lufkin & Jenrette)的一份工作，之后离职创建了自己的对冲基金。1997年，他创建了对冲基金Himalaya Partners。之后，他建立了一只风险投资基金，以便投资美国的科技公司。
当时正值华尔街令人迷醉的时候。互联网热刚刚开始。投资者们吵着找热门股。
通过他的人权人士的关系，李路迅速吸引了包括伯恩斯坦(Bob Bernstein)和音乐家斯汀(Sting)在内的富有客户。伯恩斯坦是兰登书屋(Random House)前董事长，也是“人权观察”前主席。李路说，其他投资者还包括金融家科尔博格(Jerome Kohlberg)，新闻集团(News Corp.)董事、Allen & Co.高管舒曼(Stanley Shuman)，以及对冲基金经理纳什(Jack Nash)。
新闻集团拥有道琼斯公司(Dow Jones & Co.)和《华尔街日报》。道琼斯公司为道琼斯通讯社的出版商。
不过，1998年李路担任对冲基金经理的第一年就损失惨重。他的以投资亚洲股市为主的基金受到了亚洲债务危机的严重打击，损失了19%。
他说，我感觉很糟，因为人们信任我，他们知道的只是我是一个学生活动分子，他们看到的只是损失。
随着亚洲危机迅速消退，他的财富反弹。1998年伊始，一场新的大牛市也随之到来。当时对冲基金行业急速发展，到1999年末，李路的基金已经补回了损失。
2002年，对冲基金巨头朱利安•罗伯森(Julian Robertson)斥资投资李路的基金，条件是基金在做多的同时也要做空。
这样的条件并不合适。李路说他痛恨做空股票，抱怨说他不得不一直进行交易，调整自己的投资组合。（该基金剩余的部分目前正在清理。）罗伯森拒绝就这一商业关系发表评论。
简•奥尔森(Jane Olson)是李路在人权方面的一位联络人，她的丈夫罗纳德•奥尔森(Ronald Olson)是伯克希尔的董事，还曾是芒格帮助创建的一家洛杉矶法律事务所的早期合伙人。李路会去奥尔森夫妇位于加州圣巴巴拉的周末度假房，2003年的感恩节，他遇到了家在附近的芒格。
芒格说，李路马上就给他留下了印象。他说，两人都对金融公司报告的收益抱有怀疑，也都不喜欢听那些废话。
芒格给了李路一部分家庭储蓄用于投资，创立了一个押注严重受挫股票的“价值”基金。
李路说，两周后他与芒格再度会面，以确保后者的听证权。2004年初，李路创立了一个基金，自己投资400万美元，又从其他投资者那里筹集5,000万美元。芒格的家族投资5,000万，后来又投资3,800万。李路与芒格达成的协议中有基金将不再向新投资者开放的内容。
李路获得成功始于2002年首次投资比亚迪，当时比亚迪只是一家羽翼未丰的中国电池公司。比亚迪创始人出身贫寒，1995年用借来的30万美元开创了这家公司。
比亚迪在香港证交所进行首次公开募股(IPO)后不久，李路就投资了这家公司。（比亚迪在美国“粉单”(Pink Sheets)市场交易，最近报每股6.90美元。）
李路创立自己的基金后，再次买进比亚迪股票，最终将与芒格共同经营的1.5亿美元基金中很大一部分都投向了比亚迪，后者当时迅速发展，已经收购了一家破产的中国汽车制造商。芒格说，李路一开始只买了一点儿，后来比亚迪股票下跌时又买入更多，这是他的特点。
2008年，芒格还说服索科尔为伯克希尔调查比亚迪。索科尔去了中国，回到美国后，他与芒格一同劝说巴菲特加大对比亚迪的投资。9月，伯克希尔向比亚迪投资2.3亿美元，收购了该公司10%的股份。
比亚迪的业务一直火爆。现在它已占了全球用于手机的锂电池市场近三分之一的份额。比亚迪更宏大的计划包括电动汽车和混合动力车方面的业务。
作为中国最大的汽车厂商之一，比亚迪面临的考验在于能否实现其开发市场上能效最高的锂电池的计划，这种电池未来可能成为更强劲的动力来源。更有前景的是，锂电池有可能用于存储太阳能和风能等其他能源产生的电力。
芒格说，大型锂电池将改变整个行业的状况。
比亚迪是李路重点押注的对象。他是该公司的非正式顾问，并拥有约2.5%的股权。
李路的基金向比亚迪投资的4,000万美元现在价值约4亿美元。伯克希尔2008年投资的2.3亿美元现在价值约15亿美元。巴菲特、芒格、索科尔和李路，还有微软创始人兼伯克希尔董事比尔•盖茨(Bill Gates)计划今年9月访问中国并参观比亚迪。
现在李路可以在有限制的条件下在中国旅行。但中国政府对他有何看法还不清楚。
李路拒绝透露基金的其他资产。虽然今年出现亏损，但这个规模6亿美元的基金自2004年底创立以来已经增长了338%，年化回报率约30%，而标普500指数年化回报率不足1%。
李路对投资者说，他从世界杯观赛经历中汲取了一项教训，他将自己的投资风格比作足球。他说，你有可能踢得非常卖力，但就是进不了球，但偶然之间──非常偶然──你得到一两个好机会，从而踢进决定性的进球。
Susan Pulliam
（更新完成）
Twenty-one years ago, Li Lu was a student leader of the Tiananmen Square protests. Now a hedge-fund manager, he is in line to become a successor to Warren Buffett at Berkshire Hathaway Inc.
Mr. Li, 44 years old, has emerged as a leading candidate to run a chunk of Berkshire's $100 billion portfolio, stemming from a close friendship with Charlie Munger, Berkshire's 86-year-old vice chairman. In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. 'In my mind, it's a foregone conclusion,' Mr. Munger said.
(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)
The job of filling Mr. Buffett's shoes is among the most high-profile succession stories in modern corporate history. Mr. Buffett, who will turn 80 in a month, says he has no current plans to step down and will likely split his job after he leaves the company into separate CEO and investing functions. Mr. Li's emergence as a contender to oversee Berkshire investments is the first time a name has been identified to fill the investment part of Mr. Buffett's legendary role.
The development illustrates that Berkshire is moving toward putting in place--possibly sooner than investors anticipated--certain aspects of its succession plan.
The Chinese-American investor already has made money for Berkshire: He introduced Mr. Munger to BYD Co. , a Chinese battery and auto maker, and Berkshire invested. Since 2008, Berkshire's BYD stake has surged more than six-fold, generating profit of about $1.2 billion, Mr. Buffett says. Mr. Li's hedge funds have garnered an annualized compound return of 26.4% since 1998, compared to 2.25% for the Standard & Poor's 500 stock index during the same period.
Mr. Li's ascent on Wall Street has been no less dramatic. He spent his childhood shuttling between foster families after his mother and father were sent to labor camps during the Cultural Revolution. After the Tiananmen Square protest, he escaped to France and came to the U.S. Investors in his hedge fund have included a group of senior U.S. business executives and the musician Sting, who calls Mr. Li 'hardworking and clever.'
Mr. Li's investing strategy represents a significant shift for Mr. Buffett: Mr. Li invests chiefly in high-technology companies in Asia. Mr. Buffett typically has ignored investments in industries he says he doesn't understand.
Mr. Buffett says Berkshire's top investing job could be filled by two or more managers who would be on equal footing and divide up responsibility for managing Berkshire's $100 billion portfolio. David Sokol, chairman of Berkshire unit MidAmerican Energy Holdings, is considered top contender for CEO. Mr. Sokol, 53, joined MidAmerican in 1991 and is known for his tireless work ethic.
In an interview, Mr. Buffett declines to comment directly on succession plans. But he doesn't rule out bringing in an investment manager such as Mr. Li while still at Berkshire's helm.
'I like the idea of bringing on other investment managers while I'm still here,' Mr. Buffett says. He says he doesn't preclude making a move this year, though he adds that there is no 'goal' to bring on an additional manager that quickly either. Mr. Buffett says he envisions a team approach in which the Berkshire investment officials would be 'paid as a group' from one pot, he says. 'I don't want them to compete.'
Mr. Li fits the bill in some important ways, Mr. Buffett says. 'You want someone' who 'can think about problems that haven't yet existed before,' he says. Mr. Li is a contrarian investor, loading up on BYD shares when they were beaten down. And he's a big fan of Berkshire, which may also help his cause. 'We don't want them unless they have special feelings about Berkshire,' Mr. Buffett says.
But hiring Mr. Li could be risky. His big bet on BYD is his only large-scale investing home run. Without the BYD profits, his performance as a hedge-fund manager is unremarkable.
It's unclear whether he could rack up such profits if managing a large portfolio of Berkshire's.
What's more, his strategy of 'backing up the truck,' to make large investments and not wavering when the markets turn down could backfire in a prolonged bear market. Despite a 200% return in 2009, he was down 13% at the end of June this year, nearly double the 6.6% drop in the S&P-500 during the period.
Mr. Li declines to discuss a potential Berkshire position, saying only that he feels fortunate to be a member of the Berkshire inner circle. 'This is the stuff you can't conjure in dreams,' he says.
Mr. Li was born in 1966, the year Mao Zedong's Cultural Revolution began. When he was nine months old, he says, his father, an engineer, was sent to a coal mine to be 're-educated.' His mother was sent to a labor camp. Mr. Li's parents paid various families to take him in. He was shuttled from family to family for several years until moving in with an illiterate coal miner, with whom he developed a close bond, in his hometown of Tangshan. Living apart from his family as a child taught him survival skills, Mr. Li says.
He was reunited with his family, including two brothers, by age 10, when a massive earthquake hit his hometown, killing an estimated 242,000 people in the area, including the coal miner and his family. His nuclear family was spared, he says, but 'most of the people I knew were killed.'
At the time, he says he had no direction and was fighting in the streets. Mr. Li says his grandmother, who was among the first women in her city to attend college, inspired him to begin reading and studying. He later attended Nanjing University, majoring in physics.
In April 1989, he traveled to Tiananmen Square in Beijing to meet with students who were gathering to mourn the death of Secretary General Hu Yaobang, who was viewed as a supporter of democracy and reforms.
The students protested against corruption, among other things, and Mr. Li helped organize the students and participated in a hunger strike.
He and other students fled to France. Later in 1989, he traveled to the U.S. to speak at Columbia University, where human-rights activists embraced him as a hero. He spoke little English but landed an advance to write a book about his experiences.
Helped by financial scholarships at Columbia, Mr. Li quickly learned English. He became one of the first students at the university to simultaneously earn three degrees: an economics degree, a law degree and a graduate degree in business, according to Columbia.
With his student loans piling up, Mr. Li attended a lecture by Mr. Buffett at Columbia in 1993. At the time, the 1990s bull market was in full swing, and hedge funds were on the rise. Mr. Li says in China he didn't trust financial markets but hearing Mr. Buffett helped him overcome skepticism about stock investing.
He began dabbling in stocks using money from his book advance. By his graduation in 1996, he had built a sizable nest egg and says he thought he could retire. Instead he took a job at securities firm Donaldson Lufkin & Jenrette and then left to set up his own hedge fund. In 1997, he had set up Himalaya Partners, a hedge fund. Later he started a venture-capital fund to invest in U.S. technology companies.
It was a heady time on Wall Street. The Internet boom was beginning. Investors were clamoring to find hot stocks.
Through his human-rights contacts, Mr. Li quickly attracted well-heeled clients including Bob Bernstein, former chairman of Random House and former chairman of Human Rights Watch, as well as the musician Sting. Other investors included financier Jerome Kohlberg, News Corp. (NWSA) director and Allen & Co. executive Stanley Shuman and hedge fund manager Jack Nash, Mr. Li says.
News Corp. owns Dow Jones & Co., publisher of this newswire, and The Wall Street Journal.
But Mr. Li bombed out in 1998, his first year as a hedge fund manager. His fund, which was invested chiefly in Asian stocks, was hammered by the Asian debt crisis, and lost 19%.
'I felt bad that people had trusted me,' he says. 'All they knew was I was a student activist and all they saw was losses.'
His fortunes rebounded as the Asian crisis quickly faded. As 1998 began, so did a huge new bull market. By now, the hedge-fund industry was growing gangbusters, and by the end of 1999, Mr. Li's fund had regained its losses.
In 2002, hedge-fund giant Julian Robertson gave Mr. Li money to invest in his fund on the condition that the fund would make bearish as well as bullish bets on companies.
It wasn't a good fit. Mr. Li says he 'hated' betting against stocks, complaining that he had to 'trade all the time' to adjust his portfolio. (The remaining parts of the fund now are being unwound.) Mr. Robertson declined to comment on the business relationship.
One of Mr. Li's human-rights contacts was Jane Olson, the wife of Ronald Olson, a Berkshire director and early partner at a Los Angeles law firm Mr. Munger helped found. Mr. Li began spending time at the Olsons' weekend home in Santa Barbara, Calif., and on Thanksgiving 2003 met Mr. Munger, whose home is nearby.
Mr. Munger says Mr. Li made an immediate impression. The two shared a 'suspicion of reported earnings of finance companies,' Mr. Munger says. 'We don't like the bull-- .'
Mr. Munger gave Mr. Li some of his family's nest egg to invest to open a 'value' fund betting on beaten-down stocks.
Two weeks later, Mr. Li says he met again with Mr. Munger to make certain he had heard right. In early 2004, Mr. Li opened a fund, putting in $4 million of his own money and raising an additional $50 million from other investors. Mr. Munger's family put in $50 million, followed by another $38 million. Part of Mr. Li's agreement with Mr. Munger was that the fund would be closed to new investors.
Mr. Li's big hit began in 2002 when he first invested in BYD, then a fledgling Chinese battery company. Its founder came from humble beginnings and started the company in 1995 with $300,000 of borrowed money.
Mr. Li made an initial investment in BYD soon after its initial public offering on the Hong Kong stock exchange. (BYD trades in the U.S. on the Pink Sheets and was recently quoted at $6.90 a share.)
When he opened the fund, he loaded up again on BYD shares, eventually investing a significant share of the $150 million fund with Mr. Munger in BYD, which already was growing quickly and had bought a bankrupt Chinese automaker. 'He bought a little early and more later when the stock fell, which is his nature,' Mr. Munger says.
In 2008, Mr. Munger persuaded Mr. Sokol to investigate BYD for Berkshire as well. Mr. Sokol went to China and when he returned, he and Mr. Munger convinced Mr. Buffett to load up on BYD. In September, Berkshire invested $230 million in BYD for a 10% stake in the company.
BYD's business has been on fire. It now has close to one-third of the global market for lithium-ion batteries, used in cell phones. Its bigger plans involve the electric and hybrid-vehicle business.
The test for BYD, one of the largest Chinese car makers, will be whether it can deliver on plans to develop the most effective lithium battery on the market that could become an even bigger source of power in the future. Even more promising is the potential to use the lithium battery to store power from other energy sources, like solar and wind.
Says Mr. Munger: 'The big lithium battery is a game-changer.'
BYD is a big roll of the dice for Mr. Li. He is an informal adviser to the company and owns about 2.5% of the company.
Mr. Li's fund's $40 million investment in BYD is now worth about $400 million. Berkshire's $230 million investment in 2008 now is worth about $1.5 billion. Messrs. Buffett, Munger, Sokol, Li and Microsoft founder and Berkshire Director Bill Gates plan to visit China and BYD in September.
Mr. Li is able to travel in China on a limited basis today. But it isn't clear how he is viewed by the Chinese government.
Mr. Li declined to name his fund's other holdings. Despite this year's losses, the $600 million fund is up 338% since its late 2004 launch, an annualized return of around 30%, compared to less than 1% for the S&P 500 index.
Mr. Li told investors he took a lesson from watching the World Cup, comparing his investment style to soccer. 'You may very well work extremely hard and seldom score,' he says. 'But occasionally--very occasionally--you get one or two great chances and you make decisive strikes that really matter.'
Susan Pulliam
Mr. Li, 44 years old, has emerged as a leading candidate to run a chunk of Berkshire's $100 billion portfolio, stemming from a close friendship with Charlie Munger, Berkshire's 86-year-old vice chairman. In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. 'In my mind, it's a foregone conclusion,' Mr. Munger said.
(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)
The job of filling Mr. Buffett's shoes is among the most high-profile succession stories in modern corporate history. Mr. Buffett, who will turn 80 in a month, says he has no current plans to step down and will likely split his job after he leaves the company into separate CEO and investing functions. Mr. Li's emergence as a contender to oversee Berkshire investments is the first time a name has been identified to fill the investment part of Mr. Buffett's legendary role.
The development illustrates that Berkshire is moving toward putting in place--possibly sooner than investors anticipated--certain aspects of its succession plan.
The Chinese-American investor already has made money for Berkshire: He introduced Mr. Munger to BYD Co. , a Chinese battery and auto maker, and Berkshire invested. Since 2008, Berkshire's BYD stake has surged more than six-fold, generating profit of about $1.2 billion, Mr. Buffett says. Mr. Li's hedge funds have garnered an annualized compound return of 26.4% since 1998, compared to 2.25% for the Standard & Poor's 500 stock index during the same period.
Mr. Li's ascent on Wall Street has been no less dramatic. He spent his childhood shuttling between foster families after his mother and father were sent to labor camps during the Cultural Revolution. After the Tiananmen Square protest, he escaped to France and came to the U.S. Investors in his hedge fund have included a group of senior U.S. business executives and the musician Sting, who calls Mr. Li 'hardworking and clever.'
Mr. Li's investing strategy represents a significant shift for Mr. Buffett: Mr. Li invests chiefly in high-technology companies in Asia. Mr. Buffett typically has ignored investments in industries he says he doesn't understand.
Mr. Buffett says Berkshire's top investing job could be filled by two or more managers who would be on equal footing and divide up responsibility for managing Berkshire's $100 billion portfolio. David Sokol, chairman of Berkshire unit MidAmerican Energy Holdings, is considered top contender for CEO. Mr. Sokol, 53, joined MidAmerican in 1991 and is known for his tireless work ethic.
In an interview, Mr. Buffett declines to comment directly on succession plans. But he doesn't rule out bringing in an investment manager such as Mr. Li while still at Berkshire's helm.
'I like the idea of bringing on other investment managers while I'm still here,' Mr. Buffett says. He says he doesn't preclude making a move this year, though he adds that there is no 'goal' to bring on an additional manager that quickly either. Mr. Buffett says he envisions a team approach in which the Berkshire investment officials would be 'paid as a group' from one pot, he says. 'I don't want them to compete.'
Mr. Li fits the bill in some important ways, Mr. Buffett says. 'You want someone' who 'can think about problems that haven't yet existed before,' he says. Mr. Li is a contrarian investor, loading up on BYD shares when they were beaten down. And he's a big fan of Berkshire, which may also help his cause. 'We don't want them unless they have special feelings about Berkshire,' Mr. Buffett says.
But hiring Mr. Li could be risky. His big bet on BYD is his only large-scale investing home run. Without the BYD profits, his performance as a hedge-fund manager is unremarkable.
It's unclear whether he could rack up such profits if managing a large portfolio of Berkshire's.
What's more, his strategy of 'backing up the truck,' to make large investments and not wavering when the markets turn down could backfire in a prolonged bear market. Despite a 200% return in 2009, he was down 13% at the end of June this year, nearly double the 6.6% drop in the S&P-500 during the period.
Mr. Li declines to discuss a potential Berkshire position, saying only that he feels fortunate to be a member of the Berkshire inner circle. 'This is the stuff you can't conjure in dreams,' he says.
Mr. Li was born in 1966, the year Mao Zedong's Cultural Revolution began. When he was nine months old, he says, his father, an engineer, was sent to a coal mine to be 're-educated.' His mother was sent to a labor camp. Mr. Li's parents paid various families to take him in. He was shuttled from family to family for several years until moving in with an illiterate coal miner, with whom he developed a close bond, in his hometown of Tangshan. Living apart from his family as a child taught him survival skills, Mr. Li says.
He was reunited with his family, including two brothers, by age 10, when a massive earthquake hit his hometown, killing an estimated 242,000 people in the area, including the coal miner and his family. His nuclear family was spared, he says, but 'most of the people I knew were killed.'
At the time, he says he had no direction and was fighting in the streets. Mr. Li says his grandmother, who was among the first women in her city to attend college, inspired him to begin reading and studying. He later attended Nanjing University, majoring in physics.
In April 1989, he traveled to Tiananmen Square in Beijing to meet with students who were gathering to mourn the death of Secretary General Hu Yaobang, who was viewed as a supporter of democracy and reforms.
The students protested against corruption, among other things, and Mr. Li helped organize the students and participated in a hunger strike.
He and other students fled to France. Later in 1989, he traveled to the U.S. to speak at Columbia University, where human-rights activists embraced him as a hero. He spoke little English but landed an advance to write a book about his experiences.
Helped by financial scholarships at Columbia, Mr. Li quickly learned English. He became one of the first students at the university to simultaneously earn three degrees: an economics degree, a law degree and a graduate degree in business, according to Columbia.
With his student loans piling up, Mr. Li attended a lecture by Mr. Buffett at Columbia in 1993. At the time, the 1990s bull market was in full swing, and hedge funds were on the rise. Mr. Li says in China he didn't trust financial markets but hearing Mr. Buffett helped him overcome skepticism about stock investing.
He began dabbling in stocks using money from his book advance. By his graduation in 1996, he had built a sizable nest egg and says he thought he could retire. Instead he took a job at securities firm Donaldson Lufkin & Jenrette and then left to set up his own hedge fund. In 1997, he had set up Himalaya Partners, a hedge fund. Later he started a venture-capital fund to invest in U.S. technology companies.
It was a heady time on Wall Street. The Internet boom was beginning. Investors were clamoring to find hot stocks.
Through his human-rights contacts, Mr. Li quickly attracted well-heeled clients including Bob Bernstein, former chairman of Random House and former chairman of Human Rights Watch, as well as the musician Sting. Other investors included financier Jerome Kohlberg, News Corp. (NWSA) director and Allen & Co. executive Stanley Shuman and hedge fund manager Jack Nash, Mr. Li says.
News Corp. owns Dow Jones & Co., publisher of this newswire, and The Wall Street Journal.
But Mr. Li bombed out in 1998, his first year as a hedge fund manager. His fund, which was invested chiefly in Asian stocks, was hammered by the Asian debt crisis, and lost 19%.
'I felt bad that people had trusted me,' he says. 'All they knew was I was a student activist and all they saw was losses.'
His fortunes rebounded as the Asian crisis quickly faded. As 1998 began, so did a huge new bull market. By now, the hedge-fund industry was growing gangbusters, and by the end of 1999, Mr. Li's fund had regained its losses.
In 2002, hedge-fund giant Julian Robertson gave Mr. Li money to invest in his fund on the condition that the fund would make bearish as well as bullish bets on companies.
It wasn't a good fit. Mr. Li says he 'hated' betting against stocks, complaining that he had to 'trade all the time' to adjust his portfolio. (The remaining parts of the fund now are being unwound.) Mr. Robertson declined to comment on the business relationship.
One of Mr. Li's human-rights contacts was Jane Olson, the wife of Ronald Olson, a Berkshire director and early partner at a Los Angeles law firm Mr. Munger helped found. Mr. Li began spending time at the Olsons' weekend home in Santa Barbara, Calif., and on Thanksgiving 2003 met Mr. Munger, whose home is nearby.
Mr. Munger says Mr. Li made an immediate impression. The two shared a 'suspicion of reported earnings of finance companies,' Mr. Munger says. 'We don't like the bull-- .'
Mr. Munger gave Mr. Li some of his family's nest egg to invest to open a 'value' fund betting on beaten-down stocks.
Two weeks later, Mr. Li says he met again with Mr. Munger to make certain he had heard right. In early 2004, Mr. Li opened a fund, putting in $4 million of his own money and raising an additional $50 million from other investors. Mr. Munger's family put in $50 million, followed by another $38 million. Part of Mr. Li's agreement with Mr. Munger was that the fund would be closed to new investors.
Mr. Li's big hit began in 2002 when he first invested in BYD, then a fledgling Chinese battery company. Its founder came from humble beginnings and started the company in 1995 with $300,000 of borrowed money.
Mr. Li made an initial investment in BYD soon after its initial public offering on the Hong Kong stock exchange. (BYD trades in the U.S. on the Pink Sheets and was recently quoted at $6.90 a share.)
When he opened the fund, he loaded up again on BYD shares, eventually investing a significant share of the $150 million fund with Mr. Munger in BYD, which already was growing quickly and had bought a bankrupt Chinese automaker. 'He bought a little early and more later when the stock fell, which is his nature,' Mr. Munger says.
In 2008, Mr. Munger persuaded Mr. Sokol to investigate BYD for Berkshire as well. Mr. Sokol went to China and when he returned, he and Mr. Munger convinced Mr. Buffett to load up on BYD. In September, Berkshire invested $230 million in BYD for a 10% stake in the company.
BYD's business has been on fire. It now has close to one-third of the global market for lithium-ion batteries, used in cell phones. Its bigger plans involve the electric and hybrid-vehicle business.
The test for BYD, one of the largest Chinese car makers, will be whether it can deliver on plans to develop the most effective lithium battery on the market that could become an even bigger source of power in the future. Even more promising is the potential to use the lithium battery to store power from other energy sources, like solar and wind.
Says Mr. Munger: 'The big lithium battery is a game-changer.'
BYD is a big roll of the dice for Mr. Li. He is an informal adviser to the company and owns about 2.5% of the company.
Mr. Li's fund's $40 million investment in BYD is now worth about $400 million. Berkshire's $230 million investment in 2008 now is worth about $1.5 billion. Messrs. Buffett, Munger, Sokol, Li and Microsoft founder and Berkshire Director Bill Gates plan to visit China and BYD in September.
Mr. Li is able to travel in China on a limited basis today. But it isn't clear how he is viewed by the Chinese government.
Mr. Li declined to name his fund's other holdings. Despite this year's losses, the $600 million fund is up 338% since its late 2004 launch, an annualized return of around 30%, compared to less than 1% for the S&P 500 index.
Mr. Li told investors he took a lesson from watching the World Cup, comparing his investment style to soccer. 'You may very well work extremely hard and seldom score,' he says. 'But occasionally--very occasionally--you get one or two great chances and you make decisive strikes that really matter.'
Susan Pulliam
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