Buffett wins unusual $1M bet vs. hedge fund

Buffett wins unusual $1M bet vs. hedge fund

September 12, 2017 3:00 AM
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In an unusual “mano a mano” wager made nearly 10 years ago, investor Warren Buffett is now collecting $1 million for his favorite charity.

Buffett made the bet at the end of 2007 with hedge fund manager Ted Seides of Protégé Partners. He wagered that a low-cost S&P 500 index fund would out perform a group of Protégé’s hedge funds.

Seides’ fund is so far behind Buffett’s index investment that he’s paying off now even though the bet’s time frame doesn’t officially end until Dec. 31.

Seides’ five funds, through the middle of this year, have been only able to gain 2.2 percent a year since 2008, compared with more than 7 percent a year for the S&P 500. The result: Seides’ $1 million hedge fund investments have only earned $220,000 in the same period that Buffett’s low-fee investment gained $854,000.

The $1 million will go to a Buffett charity, Girls Inc. of Omaha.