And Finally

The world’s priciest steak

Chinese media speculates on the merits of spending $2.11 million on a lunch

The world’s priciest steak

Expensive food for thought: Buffett with Zhao and his son

“You can’t produce a baby in one month by getting nine women pregnant,” was Warren Buffett’s response when asked whether America’s $787 billion stimulus package was working. His meaning: no matter how much stimulus you apply, it takes time to work.

Such wit is well worth the price of lunch. But a $2.11 million meal? The Chinese press has been spilling much ink this week on what it terms the “sky-high priced lunch” that Zhao Danyang bought for Buffett.

The annual charity event – in aid of the Glide Foundation – sees the winning bidder earn an exclusive steakhouse lunch with the Sage of Omaha. They can bring along eight friends too, and ask Buffett for his views on practically anything.

The Chinese press – which doesn’t seem to care much about the charitable angle – has been debating whether the lunch was an extravagant waste of money, or a stroke of genius on Zhao’s part.

Zhao is a Chinese fund manager, who runs Pure Heart Asset Management. A bit like Buffett he believes in kicking the tyres before making his investments. He told Euromoney magazine that his more unorthodox research work had included sneaking into a factory to talk to the workers and counting cars on a toll road.

Although he is already one of China’s more prominent investors, Zhao nevertheless seems to have calculated that lunch with Buffett could generate a positive halo-effect. He told Chinese journalists that he planned to talk to the Berkshire Hathaway boss about four of his favourite Chinese stocks: Moutai (a wine), E-Jiao (a Chinese medicine), BYD and Wumart Stores. Buffett already owns BYD (see WiC11) but Zhao’s hope was to persuade him to buy the other three stocks.

The company that Zhao pushed hardest was Wumart, even bringing along annual reports for Buffett’s benefit. According to the National Business Daily, Zhao’s fund has almost 66 million Wumart shares. In the wake of the meal – with many speculating that Buffett might buy – the supermarket chain’s stock soared almost 24% in four days, to a two and a half year high.

The newspaper comments: “The book value of Zhao Danyang’s holding [via his fund] increased by nearly $16.8 million, which is equivalent to about eight times the cost of the sky-high priced lunch.”

So not a bad return on a charitable donation.

Next year’s Buffett lunch has been sold for $1.68 million. The existence of a lucky ‘8’ in the bid also has many speculating that the winning bidder could again be a Chinese.

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