OMAHA, Neb. (AP) — Ten years ago, Omaha billionaire Warren Buffett was so sure that his chosen SP 500 stock index fund would outperform a collection of hedge funds that he made a $1 million bet over it.
The Oracle of Omaha won.
On Friday, a couple of money managers with Protégé Partners LLC were in Omaha to pay up. More than $2 million is now going to Girls Inc. of Omaha.
The Omaha World-Herald reports that Girls Inc. will invest the money and use the income to support a new residential program for young women leaving foster care. The facility is due to open next year in a former convent. Its name: Protégé House.
Warren Buffet Won a $1 Million Bet and Donated It to a Girls’ Charity Buffet bet $1 million back in 2007 that an SP 500 stock index would mature better than a basket of hedge funds over the next 10 years. That bet officially came to fruition last year, with the index fund returning 7.1 percent compounded annually vs. the basket of funds average return of 2.2 percent. Buffet had promised to donate the money to ‘Girls Inc. of Omaha’ who said that they will use the money for housing for girls who age out of foster care. “That’s a really life-changing gift for the girls, and it’s certainly a big change for our agency as well.” “Of course I had full confidence that he would win, but I thought, ‘10 years, it’s so long. Who knows?’”
Had Protégé won, it would have donated the money to Absolute Returns for Kids, a British nonprofit.
Buffett’s fund gained 94 percent over 10 years. Protégé’s selected funds gained 24 percent.
Information from: Omaha World-Herald, http://www.omaha.com