Warren Buffett has used the occasion of his latest triumph not only to make sexually retrograde jokes, but also to throw some shade at hedge fund managers in advance of his all-but-certain victory over the industry in his famed 10-year, $1 million bet about whether it’s better to invest an a hedge fund or an S&P500 index fund.
Buffett called these results “dismal –really dismal. And alas, the huge fixed fees charged by all of the funds and fund-of-funds involved – fees that were totally unwarranted by performance – were such that their managers were showered with compensation over the nine years that have passed.” He went on to estimate that 60% of the gains on those five fund-of-funds went to their managers over that period, calling that a “misbegotten reward.”
To the question of who he’d most readily pick to manage his fortune over a hedge fund, one might expect Buffett to say, “anyone.” Or perhaps “Jack Bogle,” given his plan to erect a statue in honor of the Vanguard Group founder. But no: Warren would rather give his money to a Brooklyn math professor than any hedge fund out there. A Brooklyn math professor who died in 1964, and whose name Buffett's biographer couldn't even be bothered to spell correctly.
Warren Buffett told CNBC on Monday that if he’d had to pick one person to manage his money, it would have been a “fella you never heard of: Herb Wolfe….”
“Herb Wolf was one of the smartest guys I ever met. He could tell the effect on American Water Works’ earnings if somebody took a bath in Hackensack, New Jersey. He was unbelievable. One day Herb said to me, ‘Warren, if you’re looking for a gold needle in a haystack of gold, it’s not better to find the gold needle.’ I had this thing that the more obscure something was, the better I liked it. I thought it was a treasure hunt. Herb got me out of that way of thinking. I loved that guy.”