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Why the Buffett approach adds up

September 30, 2010 : Permanent Link

Guardian – Terry Smith is not the first person to calculate how much poorer shareholders in Berkshire Hathaway would be if Warren Buffett had extracted fees as greedily as a hedge fund manager – meaning a 2% management fee plus 20% of the gains every year. But the arithmetic never loses its power to shock. A $1,000 investment in Berkshire Hathaway in 1965 was worth $4.3bn at the end of last year. However, on a hedge fund model, $4bn would have gone to Buffett and only $300,000 to the investor.

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