Lunch with Warren Buffett, Anyone?
Ask David Einhorn whether his lunch with celebrated investor Warren Buffett was worth $250,100 and he says: "To spend time alone with a legend is priceless."
Einhorn, who runs New York hedge fund Greenlight Capital, was the winner of the first lunch with Buffett that was auctioned off on eBay (EBAY) in 2003. This year, the eBay auction is slated to begin on June 22 with a starting bid of $25,000, and will end one week later. The winner, along with as many as seven other people, will get to share lunch and a private conversation with Buffett courtesy of upscale steakhouse chain Smith & Wollensky in New York, which will donate the meal this year at one of its restaurants and give another $10,000 to charity. "I know that Warren Buffett was a steakhouse person and thought our involvement would be a good match," says Alan Stillman, Chief Executive Officer of Smith & Wollensky.
The so-called power lunches started on a slightly smaller scale with a live auction in 2000, and have become an annual ritual. The proceeds go to the Glide Foundation, a San Francisco nonprofit organization. Indeed, their popularity has grown over the years, and last year the lunch went for $351,100. But Einhorn is quick to emphasize that, as a regular donor to charities, he was especially attracted to supporting a cause. "It's not like you're paying for the lunch," he says. "Rather, you get to contribute to a worthy cause and also get time with Warren Buffett."
As one of San Francisco's top charities, the Glide Foundation has an annual budget of $12 million and runs 86 programs that run the gamut from feeding the homeless to working with children of drug addicts and rehabilitating gang members. And its list of celebrity patrons ranges from Bill and Hillary Clinton to Sharon Stone. But the Buffett lunch has brought it worldwide prominence. The foundation's CEO, the Reverend Cecil Williams, says, "Warren Buffett has not only helped us financially, but in our branding worldwide." Almost all the winners of the eBay auctions, including Einhorn and Singapore-based investor Jason Choo, weren't familiar with Glide, but were heartened to increase bids once they read up and got to know more about the foundation.
For Buffett, who is the world's second-richest man behind Bill Gates, with a personal fortune worth over $40 billion, the lunches offer the chance to meet on a more intimate level and talk with people, most of whom are big fans and astute investors in their own right. After all, Buffett is known as "the sage of Omaha" for being able to attract hordes each year for Berkshire Hathaway's annual shareholders' meeting. This year, 24,000 made the trip in May. Some people buy one share of Berkshire Hathaway, which trades for $90,000 for Class A shares (BRK-A) and $3,000 for Class B (BRK-B), just to attend the meeting. But clearly Buffett, who is known to enjoy socializing with people, treasures these lunches. "I don't pay any penalty at all -- I get to meet new and interesting people and am delighted to do it," he says (see BusinessWeek.com, 6/8/06, "My Luncheon with Warren").
Buffett first met with the Rev. Williams in 1999, when his late wife Susan introduced them at the Glide Memorial United Methodist Church. (see BusinessWeek.com, 6/9/06, "Unconditional Love"). Impressed with the range and depth of social work undertaken by Glide, Buffett offered to help and the idea to auction the lunches was born, with the first auction taking place in 2001 and continuing every year after that.
Hedge-fund investor Einhorn was coy about revealing what nuggets of wisdom Buffett shared with him and even whether the lunch has changed him as an investor. His fund both buys and shorts stocks, and Einhorn says that it's hard to emulate Buffett, who owns some stocks for a very long time. "Some of those stocks he's had for longer than I've been alive," says 37-year old Einhorn, whose longest holding is MDC Holdings (MDC), a company with a portfolio of home builders and providers of mortgage and home insurance. His fund has owned MDC since its inception in 1996.
In 2003, Einhorn and Buffett had lunch at Michael's, a media watering hole in midtown Manhattan. Buffett didn't order his usual steak or hamburger and cherry coke, opting instead for chopped salad and an iced tea.
Even though Einhorn could have brought seven guests, he chose to bring along only his wife. Some of the other winners brought along children and siblings, says Buffett, who has become friends with all of them. In fact, he even bought breakfast when he ran into last year's anonymous winner and his sister in California. Buffett says that he finds these conversations rich and fulfilling. He and Einhorn talked about everything from world events to raising kids. Coming from the sage, priceless indeed.
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