TO: Charles Munger Sr.
FROM: The Munger Games
RE: Your Son’s Political Investment Strategies
You are one of the most successful investors in history. In partnership with the renowned Warren Buffet, you built Berkshire Hathaway into one of the most successful conglomerates in the world. That is because you recognize and know how capitalize on investment opportunities that will earn a handsome return-on-investment.
Your son Charles Munger Jr. has chosen to invest much of his inheritance on election campaigns. Some might say he is wasting his patrimony on politics. While it isn’t calculated in the same manner as in the world of finance, the idea of ROI still applies to politics and can be measured in terms of how much one spends on elections, and how often one wins those elections.
Charles Jr’s ROI during the last few election cycles has not been…encouraging. But his investments in California’s June primary campaigns were disastrous. Following is a syllabus of those investments:
Anna Bryson, Assembly District 73: This is one of the most Republican districts in the state. There were four Republican candidates who differed little terms of ideology, and only one Democrat. Given that mix, it was likely the Democrat would make the run-off and be crushed by a GOP candidate in November. Charles Jr. invested $414,422.55 to ensure that Republican would be Anna Bryson. Instead, she finished dead last, winning just 11%, or 5,861 votes. That comes out to $70.70 per vote. The winning Republican, Dana Point Councilman Bill Brough, spent a fraction of that amount.
Laguna Niguel Councilmember Paul Glaab, who spent little and benefited from no independent expenditures, dropped out of the race several days prior to the election, endorsed Bryson, and still finished ahead of her.
Bonnie Garcia, Senate District 28: Your son intervened heavily on behalf of former Assemblymember Bonnie Garcia, part of his effort to boost Republican Hispanic candidates. He spending $485,429 in independent expenditures promoting Garcia in a bitter primary contest with Riverside County Supervisor Jeff Stone and Indio City Councilmember Glenn Miller.
Thanks to your son’s massive IE, combined with Garcia’s own-fundraising, status as a former legislator and being the only serious female candidate in the race, there should have been no question of Garcia being one of the top two candidates. making the top-two run-off. However, it was not until a week after the polls closed that it became clear she would be in the November run-off, but as a near-run thing.
Stone 20,750 votes 21.9%
Garcia 18,833 votes 19.9%
Miller 18,379 19.4%
At $25.77 per vote, it was cheaper than his disastrous investment in Bryson futures, but a perilous investment that doesn’t inspire confidence in achieving a positive return in the November.
Jonathan Madison AD22: This San Mateo County district is overwhelmingly Democratic. There is no possibility a Republican can win in November, making this a vanity investment by your son. There were two Republicans running, essentially vying for the opportunity to be demolished by Democratic Assemblyman Kevin Mullin. Your son spent $35,775.37 in an attempt to bestow this honor on Jonathan Madison, a young “policy advisor” to Harmeet Dhillon, the vice chair of the state Republican Party and the cut-out for your son’s intimidation lawsuit against The Munger Games.
It failed. Young Mr. Madison lost to Mark Gilham, garnering just 13.8% of the vote to Gilham’s 15.1%.
This was a doomed investment from the start, and most certainly qualifies as wasting his patrimony.
Mario de la Piedra, AD44: You might call this one a risky investment in a start-up with a dubious pro forma. AD44 is a competitive Ventura County seat with even Democratic-Republican registration that was open due to incumbent GOP Assemblymember Jeff Gorrell’s decision to run for Congress.
Political cypher Mario de la Piedra jumped into this race on March 3, just three months before the primary. He was 26 years old and the apparent left-of-center GOP challenger to conservative Republican Rob McCoy. Not much was known about de la Piedra other than he was Hispanic and in the insurance business.
Your son was prepared to invest his capital into Port Hueneme City Councilmember Sylvia Munoz Schnopp, and had placed his mark on her through his Grow Elect committee, which is charged with electing more Hispanic Republicans.
It seems Junior didn’t perform his due diligence because on March 12, Munoz Schnopp filed for personal bankruptcy and dropped out of the race.
Apparently, that and horror at the thought of a conservative carrying the GOP banner in the November run-off against Jacqui Irwin was enough to prompt your son and heir to switch his and Grow Elect’s support to de la Piedra. Your son poured $329,500 into pro-de la Piedra independent expenditures by his Spirit of Democracy committee; Grow Elect spent another $38,130.
The investment was a total bust, a political Solyndra:
Jacqui Irwin 23,795 44.8%
Rob McCoy 16,432 30.9%
Mario de la Piedra 12,867 24.2%
The wastage of his patrimony was evident in missed opportunities, as well as in bad investments needlessly made. One of your son’s investment goals is to expand his portfolio of Hispanic Republicans moving up the elective office ladder. That’s the reason behind his Grow Elect operation. To that end, you might think he’d invest in opportunities to move Hispanic Republicans into the November run-off. Remember, your son designed the investment environment (the “jungle primary” system) under which he is making these investment decisions.
Take a couple of Orange County opportunities as examples. The 69th Assembly District is a safe Democratic seat at 51% Dem and 23% Republican, but part of moving the needle is running and supporting good candidates. AD69 is heavily Hispanic, but represented by a very Caucasian Democrat in Tom Daly. A Latina Republican, Cecilia Iglesias, threw her hat into the ring. Iglesias was elected to the Santa Ana Unified School District Board of Trustees in 2012. She’s an up-and comer with an legitimate political future, exactly the sort of candidate your son launched Grow Elect to invest in.
Except Iglesias received no assistance from Charles Munger, Jr., and she narrowly missed making the run-off. Instead, Daly’s Republican opponent will be someone named Sherry Walker, who is rumored to have been recruited by Daly in hopes of avoiding a general election face-off with Iglesias.
The overlapping 46th Congressional District, represented by Rep. Loretta Sanchez, was another lost long-term investment opportunity. CD46 is 46% Democratic and 28% Republican, with a sizable NPP vote of 22%. Re-districting left Sanchez’s district somewhat less Democratic and incorporated more conservative areas she had not previously represented. A Hispanic Republican candidate, Carlos Vasquez, entered the race. As noted, the purpose of your son’s Grow Elect committee is, at least nominally, to invest in Hispanic Republican candidates. The Vasquez candidacy was an opportunity to invest in an articulate, conservative Hispanic. Oops, maybe that was the problem – Vasquez is conservative.
In any case, by taking pass, Sanchez will now instead be squaring off in November against a quirky councilman from a city far outside CD46 instead of an energetic Hispanic who could, with assistance, help re-build GOP fortunes in CD46, or at least prevent Sanchez from taking re-election for granted.
To summarize, Mr. Munger: your son wasted hundreds of thousands of dollars on races where Republicans are going to win regardless, and most of the time the Republican he invested in lost, sometimes very badly. On the flip side, opportunities to match his investment resources with his stated investment strategies were passed by, allowing breathing room to Democrats who are now in a position to help their brethren in competitive races.
Look at it this way: if the California Republican Party was a mutual fund, would you honestly hire your son to manage it?
May we gently suggest weekend retreat with your progeny to re-educated him in the principles of sound investment that have worked so handsomely for you.