The returns of Protégé's index from 2008 through 2010, reported in Fortune magazine a year ago by long-time Buffett friend and chronicler Carol Loomis, are similar to those of the Dow Jones Credit Suisse Hedge Fund Index, after adjusting for the added fees charged by hedge fund of funds. That index fell 2.5 percent last year, and rose 4 percent in the first two months of 2012.
Protégé took the lead in the first year of the bet as its fund of funds index lost 24 percent and Vanguard's fund declined by 37 percent. Buffett narrowed the gap in subsequent years. The S&P fund returned 27 percent in 2009, compared with a gain of 16 percent for the hedge funds, according to Fortune. The stock fund rose 15 percent in 2010 as the hedge funds advanced 8.5 percent.
Overtaking Hedge Funds
The 81-year-old Buffett, who is chairman of the holding company Berkshire Hathaway Inc., ended last year neck and neck with the Protégé funds as the Vanguard fund climbed by 2.1 percent and the Protégé hedge funds lost an estimated 3.75 percent.
The first two months of this year pushed the Vanguard fund ahead as stocks returned 9 percent, more than twice the gains of hedge funds.
Buffett, who told Loomis in 2008 he placed his chances of winning at 60 percent, had originally suggested a bet against single-manager hedge funds. Had he found a taker, he would be trailing by about 6 percentage points based on the Dow Jones Credit Suisse index.
If Buffett had bet returns of his own holding company against the performance of hedge funds, he'd be even farther behind. Berkshire Hathaway shares have slumped almost 17 percent since the end of 2007.