The Wall Street Journal: Buffett wins his hedge-fund bet — and this nonprofit wins bigger

The real winner of Warren Buffett’s 10-year bet against hedge funds is Girls Inc. of Omaha.

Buffett bet $1 million in 2007 that an index fund would outperform a basket of hedge funds over a decade. The proceeds would go to charity, and Buffett designated his local Girls Inc. affiliate as the recipient if he won. When the closing bell rang at the New York Stock Exchange Friday, the famed investor locked in his victory.

Buffett, the chairman of Berkshire Hathaway Inc. BRK.A, -0.54% BRK.B, -0.67% has said throughout this year that he is confident he would win. From the start of the bet through the end of 2016, Mr. Buffett’s S&P 500 index fund SPX, -0.52%   returned 7.1% compounded annually. The competing basket of funds of hedge funds selected by asset manager Protégé Partners returned an average of 2.2%.

And because of a twist in the bet’s history, Girls Inc. of Omaha is likely to get much more than $1 million.

Buffett and Protégé Partners originally put about $320,000 each into bonds that would appreciate to $1 million over the course of their wager. But the bonds appreciated much faster than expected as interest rates fell so the two sides agreed to go for a bigger prize. In late 2012, they agreed to buy 11,200 shares of Berkshire B shares, which cost $89.70 at the end of 2012. They’ve climbed 121% since then. After Friday, the last day of trading in 2017, those 11,200 shares are worth $2.22 million.

An expanded version of this report appears on WSJ.com

Popular on WSJ.com

How to Be Healthier, Happier and More Productive: It’s All in the Timing

In Sign of Resistance, Chinese Balk at Using Apps to Snitch on Neighbors

Filed in: Top News Tags: 

You might like:

numberFire: NFL: 10 stats to know from both conference championship matchups numberFire: NFL: 10 stats to know from both conference championship matchups
If Vikings win, historic home-field Super Bowl could require steepest ticket ever If Vikings win, historic home-field Super Bowl could require steepest ticket ever
Jeff Reeves's Strength in Numbers: Prepare for these 5 tech stocks to move big on earnings Jeff Reeves's Strength in Numbers: Prepare for these 5 tech stocks to move big on earnings
Why Apple’s new campus and Amazon’s HQ2 probably won’t be neighbors Why Apple’s new campus and Amazon’s HQ2 probably won’t be neighbors
Is gold on the verge of breaking out? Is gold on the verge of breaking out?
Anniversary of Women’s March carries new message: Power to the Polls Anniversary of Women’s March carries new message: Power to the Polls
Tesla’s roaring start to 2018 is costing short sellers $1 billion Tesla’s roaring start to 2018 is costing short sellers $1 billion
The Sniff Test: Apple didn’t say it was hiring 20,000 new workers, nor bringing back all of its overseas cash The Sniff Test: Apple didn’t say it was hiring 20,000 new workers, nor bringing back all of its overseas cash

Leave a Reply

Submit Comment
© 6693 Stock Investors News. All rights reserved. XHTML / CSS Valid.