Charlie Munger’s Masterstroke of Pivoting the Daily Journal from Print to Tech

Early in my career as a practicing lawyer in Los Angeles some 25 years ago, I used to look forward to receiving the print subscription of the Daily Journal which lays out all the new appellate cases by practice area. However, as the years passed and technology advanced, I found easier ways of accessing those cases online. The story of the Daily Journal Corporation (DJCO) is a classic demonstration of legendary investor Charlie Munger’s capital allocation genius and strategic foresight. Under Munger’s long-time chairmanship, the company transformed from a traditional, and eventually dying, legal newspaper publisher into a hybrid entity: a diversified holding company with a valuable legal technology subsidiary and an enviable portfolio of marketable securities.

The Daily Journal Corporation traditionally thrived on its publishing division, which printed legal newspapers and, crucially, held an informational monopoly on publishing appellate court decisions. This monopoly generated significant cash flow, particularly during the foreclosure boom. However, the advent of the internet proved to be an existential threat, rapidly eroding the traditional newspaper’s value proposition. As Munger himself noted, the publishing business was slowly “dying.” Recognizing the inevitable decline, the company began strategically shifting its focus toward a new, high-potential area: legal technology. This pivot was spearheaded by a series of acquisitions that eventually consolidated into the subsidiary known as Journal Technologies.

Charlie Munger’s most famous and consequential capital allocation decision for the Daily Journal involved a brilliant move made during the depth of the 2008-2009 Financial Crisis.  Before the crisis, the Daily Journal held a significant portion of its excess cash in safe, low-yielding instruments, primarily U.S. Treasuries. In 2009, with the stock market in a state of panic and major financial institutions trading at fire-sale prices, Munger saw a generational opportunity. He executed a bold maneuver, selling those safe assets to deploy capital into severely undervalued bank stocks. The Daily Journal Corporation, under the direction of Charlie Munger, redeployed $20.4 million of its cash in February 2009 (at the low point of the financial crisis for the stock market) to purchase common stocks and certain bonds.  Munger invested the $20.4 million into common equity, with the major purchases being shares in:

1. Wells Fargo & Co. (WFC)
2. Bank of America Corp. (BAC)
3. U.S. Bancorp (USB)

This move was a classic Mungerian exercise in rational, long-term value investing—buying great businesses at a steep discount due to temporary market fear. The initial investment has grown into a substantial marketable securities portfolio worth hundreds of millions of dollars, which today often surpasses the operating business value of the Daily Journal itself.  Based on the 13f filing in Q3 2025, the value of the Daily Journal stock portfolio today has grown to approximately $262 million.  That is a 13 bagger since Munger deployed the capital back in 2009.  This portfolio serves as a significant source of wealth and a strong balance sheet for the company.

The portfolio is comprised of only four common stock holdings, listed below with their approximate values and percentage of the total portfolio:

If you notice, three of the four stocks in the portfolio are the same stocks acquired in 2009. The only stock added since 2009 was Alibaba. This is a classic example of how Munger buys and holds on to stocks as a business to own long-term. The incidental benefit of such an approach is tax efficiency.

While Munger’s stock portfolio made headlines, the parallel development of the software division was critical to the company’s long-term operational survival.

To aggressively pursue the legal technology market, the Daily Journal utilized its considerable investment portfolio as collateral to take out margin debt. This was a notable and rare instance of Munger, a famously cautious investor, using leverage. He justified this by stating the risk was small relative to the potential long-term reward of building a second, sustainable business. The borrowed capital, alongside the cash flow from the publishing business and the investment portfolio, was used to fund the acquisition of several software companies that were eventually merged to form Journal Technologies.

The initial foray into the software business started in 1999 with the acquisition of Sustain Technologies. This early acquisition was financed by the cash flow generated by the company’s traditional publishing business (legal newspapers). A temporary boom in revenue from public notice advertising for foreclosures during the housing crisis provided a significant injection of cash flow. Management used this elevated cash flow to build up the securities portfolio.

The Daily Journal’s management has consistently stated that having this large, liquid, and valuable stock portfolio on its balance sheet provided the company with the financial stability and capital needed to execute its slow, long-term software strategy. Charlie Munger explained that the financial strength of the portfolio allowed them to be patient and disciplined in building the software business, unlike typical start-ups that need to rush to profitability. This capital allowed them to pursue a disciplined M&A strategy, including the key acquisitions of New Dawn Technologies (2012) and ISD Technologies (2013), which formed the core of Journal Technologies.

Today, Journal Technologies (the software division of the Daily Journal) is an enterprise software company that provides case management software (CMS) and related services to the justice system. Its clients are typically governmental agencies, including Courts (appellate, superior, municipal), Prosecutors (state, county, and city), Public Defenders, and Probation, Parole, and Pretrial services. The core of their offering is built on the eSeries Framework, which is then configured to meet the specific and complex requirements of individual jurisdictions.Its services include:

1. eCourt: Comprehensive case management for all types of courts.
2. eProsecutor/eDefender: Tailored case management solutions for prosecution and public defense offices.
3. eSupervision: Tools for managing probation, parole, and pretrial services.
4. eFile-it & ePay-it: Modules that allow electronic filing of documents and online payment of court-associated fees.

The business model focuses on long-term, high-margin revenue generated from implementation fees, licensing fees, and ongoing maintenance/consulting services, which are critical for governmental entities seeking to modernize their outdated, paper-based, or legacy systems.

The pivot under Charlie Munger allowed the Daily Journal Corporation to transition its economic strength away from a dying print business, transforming it into a company with a valuable technology subsidiary and a powerful asset base built through brilliant counter-cyclical investing. As of the 2024 Annual Report, the software business generates 75% of the total revenue amounting to $53.1 million while the legacy print business is now down to 25% of the total revenue or $17.7 million.  In essence, today’s Daily Journal Corporation is a software company. Its revenues have grown from $44 million in 2015 to $70 million in 2024.  Its operating income has even grown more from $1.94 million in 2015 to $4.07 million in 2024.

It’s also worth noting that Munger’s turnaround strategy closely resembles the methods he and Buffett have used to revive other businesses.   Some examples are Dempster Mill Manufacturing, Blue Chip Stamps, GEICO and Berkshire Hathaway.  A lousy business is fixed by reallocating capital into great businesses.

Kenneth U. Reyes is CEO and Portfolio Manager at Reyes Capital Management, LLC which manages a long term value oriented private investment fund.  He is also founder of the Law Offices of Kenneth U. Reyes, APC, a five lawyer boutique law firm in Los Angeles specializing in Family Law.  He can be reached at (213) 500-4836. kr@reyescapitalmanagement.com.  3699 Wilshire Blvd., Suite 747, Los Angeles, CA 90010.

https://reyescapitalmanagement.com/

https://www.kenreyeslaw.com/