Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'

[dcollon]

I haven't seen this mentioned and actually had kind of forgotten about it myself.

 

http://www.cnbc.com/id/34149476

 

[beerbaron]

It seems to me like pure bet from Buffett it's ego is getting as big as Berkshire  :)

 

BeerBaron

[omagh]

It's a series of 10 card flips with a cumulative total score.  Buffett lost the first card flip, but let's see how he does after 9 more.  The odds are in Buffett's favour.

 

-O

 

It seems to me like pure bet from Buffett it's ego is getting as big as Berkshire  :)

 

BeerBaron

[Crip1]

I would think that a down year would be an advantage to the Fund of Funds as, like the article said, they can short. I do not recall from the original coverage of this bet but do we know the remuneration arrangements from these funds. The reason being that if these funds take a percentage of the gains, then they would be facing headwinds in years where the markets are up (as the managers take a portion of the gains leaving the rest to the investors).

 

My take is that Buffett is trying to highlight that these funds of funds, with their "stacking" of fees, are beneficial only for the managers of the funds and not for the investors. What better way to do this than to bet, which gets plenty of free media coverage? The $1M going to charity is pocket change to him should he lose and is well worth the education afforded the investing public should he win. I think it was Munger who said that these managers add nothing to society. Stating that fact only goes so far...demonstrating that fact speaks loudly.

 

-Crip

[beerbaron]

Yeah, but let's nor forget that there is some other Buffetteers in those hedge funds. Klarman, Biglari, etc...

 

I'm really against friction costs and I manage my protfolio a such and I'm glad Buffett is doing this bet.

 

Would BRK beat the S&P500 if we have treated it like a hedge fund with a cost structure of 2/20? I don't know but my guess is it's pretty even.

 

BeerBaron