In this engaging conversation, Patrick O’Shaughnessy, a savvy investor and host of the Invest Like the Best podcast, joins Ted Seides to discuss his legendary bet with Warren Buffett. They explore the nuances of hedge fund performance versus the S&P 500, shedding light on the lessons learned from the wager. Topics include the challenges of defining skill in investing, the evolving landscape of hedge funds, and the significance of personal connections at Berkshire Hathaway meetings. Expect insights on market dynamics and the impact of emotions on investment strategies!
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question_answer ANECDOTE
First Berkshire Meeting
Ted Seides' first Berkshire Hathaway meeting was in 2000 as an equity research analyst.
He recalls a smaller venue packed with hedge fund managers, contrasting with the larger, more entertainment-focused meetings of later years.
question_answer ANECDOTE
Bet's Origin
Ted Seides' bet with Warren Buffett originated from a student's question about hedge fund performance.
Seides, seeing an opportunity, wrote Buffett a letter, sparking a series of communications that led to the bet.
insights INSIGHT
PR and Bet Results
Despite losing the bet, Seides believes the PR was beneficial for Protégé Partners due to the association with Buffett.
Buffett's public acknowledgment of the bet's results varied over the years, especially during periods of market downturn.
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John Malone and the Rise of the Modern Cable Business
Mark Robichaux
This book is a penetrating portrait of John Malone's complex persona and a captivating history of the cable TV industry. Written with Malone's unprecedented cooperation, it brings to life the story of how an unassuming copper strand evolved into the digital nervous system of the U.S., providing consumers with the fastest route to the Internet. The narrative details Malone's transformation of TCI into a media colossus, his dealings with competitors and regulators, and his significant influence on the industry. The book also explores the broader history of the cable industry, including its early days of providing access to broadcast signals in rural areas and its evolution into a high-speed electronic pipeline known as broadband[1][4][5].
Today’s show is a little different from my ongoing series of conversations with Capital Allocators. As you probably know, about 9½ years ago I made a bet with a certain Oracle, in Omaha, that pitted the performance of a group of five hedge fund of funds against the S&P 500. In this year’s annual letter to Berkshire Hathaway shareholders, Warren wrote extensively about his views. You can find that letter at www.berkshirehathway.com/letters. Now I haven’t said a lot about the bet, although fairly often I’m asked how it came about, why I made the bet, what I really think about hedge funds and the market, and of course, who's winning. I thought long and hard about whether to share my views publicly, and had been leaning towards staying out of the limelight. But my guest on Episode 2 of this podcast, André Perold, convinced me that I should share the many other investment lessons the public can learn from this exercise. I thought a podcast would be a perfect venue to discuss my thoughts, so I asked my friend Patrick O’Shaughnessy to discuss the bet with me, and that conversation follows. Before we dive in, I thought it might help to let you know where to find answers to some of those common questions I’m asked. For starters, Carol Loomis, the legendary and recently retired Fortune columnist, wrote a wonderful piece called “Buffett’s Big Bet” back in 2008 that described in detail how the bet came to pass. You can find her piece at www.capitalallocatorspodcast.com/bet. On that same page, you can find links to some of my written thoughts – both at the time of the bet’s inception and two years ago. Next week, I’ll add another link with some concluding thoughts.
Capital Allocators – Inside the Institutional Investment Industry 
