Buffett Sitting Pretty In S&P vs. Hedge Funds Bet

Feb 7 2014 | 11:31am ET

Berkshire Hathaway chief Warren Buffett has opened a commanding lead in his wager with fund of hedge funds Protégé Partners.

Six years ago, Buffett and Protégé's Ted Seides made a $1 million bet, with Buffett predicting that the Standard & Poor's 500 Index would outperform hedge funds over a 10-year period, and Seides taking the opposite view. Well, six years later, Buffett's S&P index fund, Vanguard Admiral shares, is up 43.8%, against an estimated 12.5% for the five hedge funds picked by Seides.

The winner gets to choose the charity that gets the $1 million, which has actually grown to nearly $1.3 million since the money was invested in Berkshire stock.

Buffett's Admiral shares returned 32.3% last year, while Protégé's hedge funds gained just 11.8%.

"We've got our work cut out for us," Seides said. If anything, though, Buffett's success should give him hope: In the bet's first year, 2008, Admiral shares dropped 37% against the hedge funds' 24% decline. Buffett only took the lead in the race in 2012.


In Depth

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...