A Canadian investment management firm has paid a hefty price for what it hopes will be a priceless offer to some of its key supporters: the chance to dine with the planet's second-richest man.
Toronto-based Salida Capital won an online charity auction for the opportunity to send up to eight guests to a New York steak lunch with famous billionaire Warren Buffett. The cost: $1,680,300 (U.S.), airfare and accommodation not included.
"It's a once-in-a-lifetime opportunity to talk to one of the most successful investors in the world," said Salida's president and CEO, Courtenay Wolfe. "That's an experience it's hard to put a price tag on. That's invaluable to us, on a personal and professional level."
Just six months ago, Salida was in no position to splurge. The firm was hit hard by the financial crisis - the Salida Multi-Strategy Hedge Fund plunged 66.5 per cent, three of its other funds were dragged down with the Lehman Brothers ship, and by this spring, its assets were at a fraction of their peak. Salida now has $300-million in assets under management, down from about $1.2-billion.
This year, things are looking up. The company's flagship fund is up 83 per cent. But as Salida eyes its path to recovery, corporate strategy does not necessitate the kind of PR bid that the Buffett lunch may seem to be, Ms. Wolfe said.
"This is not a marketing strategy. This is something that has been on our wish list for a while," she said, noting that because the firm focuses on attracting a wealthy client base, such as institutions and wealthy family foundations, its corporate focus is on fund management, not marketing or brand awareness.
"Our products lend themselves to more sophisticated investors," Ms. Wolfe said. "That client base grows through strong performance and word of mouth."
A sliver of that client base may be receiving something more than strong performance when the reservations are made. Up to eight people will be allowed to attend lunch at the posh Smith & Wollensky steakhouse in New York City. Ms. Wolfe will be there, with chief investment officer Danny Guy and managing director Brad White, but that still leaves five spaces open. According to Ms. Wolfe, those will go to "key people" outside the company "that have been big supporters of our success over the years."
The auction closed June 26, but Salida delayed announcing their win to give them time to invite some of those key people, Ms. Wolfe said, though she declined to name the lucky guests.
All of the proceeds from Mr. Buffett's annual charity auction go to benefit a San Francisco-based charity. The Glide Foundation provides services to underprivileged people, including free meals, job training and health services.
It's an appropriate way for Salida to celebrate its 10th anniversary this year, said Paul Schmidt, chairman of the Alternative Investment Management Association, a lobby group for hedge funds.
"It's part of the hedge fund industry to give back when you've had good times," he said. "It's well known that the average tenure of a hedge fund is the three-year range, so a firm that gets past that, it's a reason to celebrate."
Bidding, which was held on eBay, began on June 21 at a starting price of $25,000. Ten bidders vied for the rendezvous with Mr. Buffett with a total of 116 bids that pushed the price up more than 6,000 per cent.
And yet, the final bid still failed to top last year's record price, $2.1-million, paid by Chinese businessman Zhao Danyang. A formal lunch date has not been set, but Ms. Wolfe expects it will be within the next six to eight months.
With files from Andrew Willis
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What to ask Warren?
The lunch is months away, but Salida Capital CEO Courtenay Wolfe already has some questions ready, including:
What are your views on the current state of the economic
environment?
How will the growth of emerging markets play a role in economic recovery?
As one of the most successful investors over the past few decades, what have you drawn from your experience to provide the insight guiding your decisions going forward?