Is Lunch With Warren Buffett Worth Millions?

SMITH BRAIN TRUST — Why would someone fork over a couple of million dollars just to sit down for a meal with Warren Buffett?

"It's not so much about investing insights from the Oracle of Omaha," says David Kass, clinical professor of finance at the University of Maryland's Robert H. Smith School of Business. "It's significantly about meeting the man."

The legendary investor "has gravitas like no other investor," Kass says. That's why someone was willing to bid $2,679,001 recently in the 18th annual Warren Buffett Power Lunch auction. The auction raises money for the San Francisco-based Glide Foundation.

Kass is a Buffett expert, having followed his investing and philosophy closely for about 35 years. The professor also has drawn insights from accompanying Smith MBAs to Omaha to meet privately — multiple times since 2005 — with the Berkshire Hathaway chairman.

The students, Kass says, tend to seek Buffett's advice about such matters as choosing a career, a job, or a spouse — priorities when you're 20 to 25 years old. (See “Buffett to Students: Master Salesmanship, Temperament”).

Power lunch winners, typically veteran portfolio and hedge fund managers, similarly look to Buffett "as not only the great investor, but also as a wise philosopher who can teach lessons on life," Kass says. "And he's entertaining."

But wisdom and humor with a steak lunch at a price of $2 million-plus? "It's not for most — but it is for those who have hundreds of millions to spend," Kass says.

Kass points to 2007 winner Guy Spier, a hedge fund manager who said his Buffett encounter changed his life through lessons drawn from such themes as "unconventional is often better," "remain a child," "learn to say no," "discover and listen to your inner scorecard" and "invest time and energy and take risks for the right relationships."

Investing also creeps in, of course, Kass adds.

Buffett in 2010 hired twice-winner Ted Weschler as a Berkshire portfolio manager.

"That was unusual," Kass says. "Weschler went in looking not to impress Buffett but to get feedback on his 20-year record as a private equity and hedge fund manager." 

Wechsler impressed Buffett with not only an outstanding track record, but also with his shrewd restraint and awareness of risk.

"Some people have a hot hand for a few years. But then they flame out," Kass says. "Buffett has given examples of portfolio managers who outperform the market for 19 years in a row, then in the 20th year, they take a lot of risk and get wiped out."

In the auction's early years, $25,000 could win the lunch with Buffett. Now, that figure represents the minimum bid, with top bids since 2008 ranging from $1 million to $3.5 million.

Recent winners have chosen to remain anonymous and also are international, with the recent previous top bids coming from China and Singapore. "There's no other investor who could draw bidders to anywhere near these levels," Kass says. "Buffett is a scarce commodity. But, in his own words, he — at 86 years old — also is 'rapidly depreciating.'"