Biz people

Buffett makes bet on S&P 500

Billionaire Warren Buffett has wagered roughly $320,000 of his own money that the S&P 500 will outperform a collection of hedge funds.

The bet covers a decade and says that all the fees, costs and expenses must be included.

The terms of the bet between the chairman and CEO of Berkshire Hathaway Inc and the money managers who own Protege Partners LLC are outlined on the Long Bets website. That group will hold the wager until the bet concludes at the end of 2017.

The specifics of the wager were first reported online Monday by Fortune magazine. The wager is invested in a bond so that the winner will be able to donate $1 million to a charity at the end.

Buffett (right) has long been critical of hedge funds because of the high fees they charge investors. At Berkshire Hathaway's 2006 annual meeting, he offered to bet $1 million that an index fund would beat any 10 hedge funds over a decade if all the fees were included.

One of Protege's co-founders, Ted Seides, sent Buffett a note last summer to take him up on the offer.

"The idea is to settle a long-standing debate in the investment community over the value of active and passive management," said Seides, whose company invests in hedge funds.

They agreed to the terms of the current bet, which is based on the performance of five portfolios of hedge funds. Seides declined to name the funds involved because of concerns about the Securities and Exchange Commission rules that bar hedge funds from promoting themselves.

Buffett's spokeswoman Jackie Wilson did not immediately respond to a message left on Monday.

Foster's chief O'Hoy quits

Foster's Group Ltd Chief Executive Officer Trevor O'Hoy quit as Australia's biggest beer and winemaker cut earnings forecasts and said it will write off as much as A$770 million ($730 million) at its wine unit.

Earnings-per-share growth before one-time items will be between 5 percent and 7 percent in the year ending June, less than the previous forecast of 10 percent, Melbourne-based Foster's said. The company will write down unsold inventory and expects lower sales of Californian wine as it starts a review of its global winemaking operations.

O'Hoy (above) led the doubling in size of Foster's wine unit in 2005 by paying A$3.2 billion for Southcorp Ltd, a price his chairman said yesterday was "too much". Since then earnings have been hit by a record Australian drought that cut output and a rising currency that lowered the value of earnings from the United States, where the company makes 27 percent of sales.

Slim pickings from Telmex?

Carlos Slim has posted an eightfold return on his stake in America Movil SAB since he spun off the wireless carrier. The Mexican billionaire may earn only a fraction of that from Telmex Internacional SAB.

Slim (right) separated America Movil from land-line company Telefonos de Mexico SA in 2001. Telmex Internacional, which sells phone service, high-speed Web access and cable television outside Mexico, began trading yesterday.

Telmex Internacional may not match America Movil's growth because it will get most of its business from the fixed-line telephone market, said Sergio Rodriguez, the head of Latin American telecommunication ratings at Fitch Ratings in Monterrey, Mexico.

The number of land lines rose less than 1 percent a year in the company's two main markets, Brazil and Colombia, from 2002 to 2007, according to the International Telecommunication Union in Geneva.

(China Daily 06/11/2008 page16)