And Finally

A costly steak

Why Chinese love to lunch with Sage of Omaha

Buffet w

To Chinese he’s ‘the god of stocks’

The idea that anyone would emerge from a private lunch with Warren Buffett as a world-beating investor is a bizarre one. It’s a bit like saying that if you gave a student three hours tuition on the piano with Mozart you’d produce a composer of genius.

Still that hasn’t stopped people paying millions of dollars over the years to dine with the Sage of Omaha. Indeed, many of those willing to pay the biggest bucks are Chinese. As far back as 2009 we reported on the $2.11 million that Chinese fund manager Zhao Danyang spent to have lunch with Buffett to trade stock ideas (see WiC22). Two other Chinese have followed suit since.

For some it is a small price to pay for proximity to the American, who occupies a particular fascination in the Chinese psyche (in May a record delegation of 2,000 travelled from China to see him at the Berkshire Hathaway AGM). And this time round the winning bid was made by Zhu Ye, a Chinese tycoon who spent $2.35 million on the charity lunch and told it was “absolutely worth it”.

Zhu hosted Buffett at the Smith & Wollensky steak house, and was joined at lunch by his wife (who is an actress), five colleagues and a translator. He said the “best” tip he got from the billionaire was: “Focus on the things you really like and really understand, and don’t buy stocks you don’t understand.”

You might well suggest you don’t have to drop a couple of million dollars to get this advice…

Zhu’s wealth is derived from Zeus Entertainment, a former wood flooring company which he refocused on gaming. As we pointed out in WiC279, obscure A-share firms have been jettisoning their core businesses and wooing investors with flashy new names: Zeus is one such reinvention. The firm’s repositioning in April was also buoyed by the news that Zhu would soon be speaking to Buffett, who is better known as the ‘god of stocks’ in China.

The Zeus share price ballooned as a result. Good news for Zhu, who owns 21% of the firm, which has a market value of around Rmb17 billion ($2.7 billion). He’d earlier topped up his bank balance when he sold a small slug of stock in April – during the run-up in the A-share market – for Rmb87 million.

But Zhu’s lavish meal has faced some criticisism at home. Changjiang Daily comments that some have accused the 38 year-old of being a “spendthrift”.

Others questioned the value of the lunch itself. “Can one meal suddenly enlighten you?” asked one netizen. “Buffett’s wife has been eating with him every day, but has she become a god of stocks?”

More worryingly for Zhu the extravagance of the high-profile lunch has jarred with the mood of austerity in China. Amid the online debates about the merits of forking out such a huge amount for a meal, some netizens have called on the authorities to investigate the source of Zhu’s wealth.

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