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Executive Producer
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We should get an update at this weekend's Berkshire Hathaway shareholders meeting on Warren Buffett's long-term bet against Wall Street.
Last June, we learned that Buffett had agreed to a 10-year, $1 million wager to back his long-held argument that "experts", specifically hedge fund managers, don't do better than the stock market as a whole, especially when you factor in the big fees those experts collect from investors.
Betting against Buffett's view: Protégé Partner's Ted Seides. He told the New York Post last year, "I just think he's wrong. There's a reason sophisticated groups have been investing in hedge funds."
As reported by Fortune's Carol Loomis, "Protégé has placed its bet on five funds of hedge funds - specifically, the averaged returns that those vehicles deliver net of all fees, costs, and expenses. On the other side, Buffett ... has bet that the returns from a low-cost S&P 500 index fund sold by Vanguard will beat the results delivered by the five funds that Protégé has selected."
ALSO ON WBW TODAY: WARREN BUFFETT SITS TALL IN THE SADDLE FOR SHAREHOLDERS MEETING
Both Buffett and Protégé (the firm, not the funds) have contributed $320,000 to buy a zero-coupon Treasury bond that will cash out at $1 million when the wager concludes in 2018.
The money goes to the winner's designated charity. It's Girl's Inc. of Omaha if Buffett wins (daughter Susan is on the board) and London-based Absolute Return for Kids if Protege wins.
The five funds chosen by Protégé haven't been revealed, but the two sides promised to update the scorecard each year at Berkshire's annual meeting, which takes place this weekend.
We do know how Buffett's selection did last year. The Vanguard 500 Index Investor fund fell 37 percent.
It will be interesting to see how the hedge funds selected by Protégé compare, especially since it was such a difficult year for the financial markets.
Current Berkshire stock prices:
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Class A: [US;BRK.A
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Class B: [US;BRK.B
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For more Buffett Watch updates follow alexcrippen on Twitter.
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- Warren Buffett Sits Tall in the Saddle For Shareholders Meeting (April 30)
- Warren Buffett May Draw Record Crowd in Omaha Despite Berkshire Hathaway's Stock Drop (April 30)
- Berkshire Hathaway Will Release Q1 Earnings On May 8 .. As Usual! (April 29)
- Berkshire Hathaway Won't Release Earnings Before Annual Meeting (April 29)
- Bill Gates Promises to Help Keep Berkshire Hathaway "Great" After Warren Buffett (April 28)
- "Business Buddha" Warren Buffett #16 On Portfolio's List of Best CEOs Ever (April 23)
- Warren Buffett Resolves the 'Mystery' of the 'Missing' Bank of America Stake (April 20)
- Why Warren Buffett Likes Wells Fargo: They Didn't Follow the "Dumb" Crowd (April 20)
Data is a real-time snapshot *Data is delayed at least 15 minutes