Jun 062019
 

I am quoted in this Smith Brain Trust (University of Maryland) article: “Why This Year’s Warren Buffett Charity Lunch is Different”

AND WHY ‘BUFFETT COULD BE LEARNING MORE FROM THE PERSON BUYING THE LUNCH’

Jun 05, 2019
Finance

SMITH BRAIN TRUST – One imagines that Warren Buffett has some pretty interesting lunch meetings. But this one is likely to be more interesting than most.

Every year, the famed value investor and CEO of Berkshire Hathaway auctions off an hours-long lunch date, with the proceeds going to Glide, a San Francisco-based charity that aims to help people grappling with poverty, homelessness or substance abuse. This year, the top bid of nearly $4.6 million came from Justin Sun, founder of cryptocurrency platform Tron and CEO of file-sharing company BitTorrent.

Buffett, of course, is a longtime, quite outspoken crypto-skeptic.

He has referred to bitcoin and other cryptocurrencies as a “delusion,” “rat poison squared” and attractive to “charlatans.” And he has forecast their downfall. In an interview on CNBC last year, he said, “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”

Nonetheless, Buffett has said this week that he’s looking forward to having lunch with Sun.

And he should be, says Maryland Smith’s David Kass. As a top bidder, Sun is different.

Virtually all of the previous top bidders – there are now 20 – have sought to gain wisdom from Buffett, the so-called Oracle of Omaha who is revered by many to be the shrewdest stock investor of all time. At this year’s lunch, Buffett will have an opportunity to ask questions and to learn from his guest, says Kass, a clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business. Kass has studied Buffett’s investments and philosophy for more than 35 years.

To be clear, Buffett doesn’t discuss specific investment ideas at the charity lunches. He considers those to be proprietary and belonging to Berkshire Hathaway, Kass notes. Topics are more general, encompassing life, experiences, business, getting ahead and giving back. “It’s as though you are spending time speaking to your wise father or wise grandfather, discussing various general issues.”

Sun, who is 27, says he will invite seven experts from across the blockchain and cryptocurrency world to join him and Buffett at the Smith & Wollensky steakhouse in Midtown Manhattan.

“This might be the first time – or one of the few times – in which Buffett could be learning more from the person buying the lunch than that person might learn from Buffett himself. That makes this unique,” says Kass.

How will it go down?

“I think they are going to try to change Buffett’s mind about cryptocurrency, and I think they will try to explain to him why they believe in cryptocurrencies and believe them to be a genuine asset class,” says Kass. “I think they will try to educate him, and from Buffett’s point of view, I think it’s a wonderful opportunity to learn. I imagine he may do a lot of homework beforehand and come prepared with a lot of good questions.”

Sun has said that he hopes to learn from Buffett. “Justin Sun has said that he is a value investor, that he shares Buffett’s values in that regard and approach,” Kass says. “And, in Sun’s own words, Warren Buffett is 60 years older than he is. So, I think both sides will be learning.”

The lunches typically go on for about four hours, (roughly $1.1 million per hour in this case, Kass notes), but this lunch will probably go on even longer. And Kass imagines that both sides may spend a roughly equal amount of time speaking, a contrast from previous engagements.

“I think this should be a very interesting lunch. I think it will be one of the best high-level seminars on blockchain and cryptocurrency that has ever been presented,” Kass says. “It is a private lunch, but I almost wish it were video-recorded and shared on the internet.”

Kass says he would watch that discussion with interest and would likely also recommend it to his finance students.

“I think that would be quite educational to the world.”

 Posted by at 8:47 am

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