It's looking good for Buffett:

http://blogs.wsj.com/marketbeat/2011/11/21/hedge-funds-kiss-...

I don't think it's that interesting.

Buffett knows what he's doing. And we all know that the wast majority of managed funds perform worse then index funds.

And Buffett did not bet on any one hedge fund, which might actually outperform. He has bet on an index of them! And not over a short time period, where again, they could outperform. But over 10 years!

I would be SHOCKED if Buffett loses this bet.

Unfortunately, the details are being kept confidential, so I'm not sure what is being counted as "hedge funds". There's "hedge funds" that engage in very risky investments, ones that engage in investments that wouldn't normally be risky except that they incur counterparty risk, and then there's hedge funds that could be fundamentally very conservative, even more conservative than Buffett.

For instance, if you ran a fund that simply bought BRK shares, and, each year, bought just enough out of the money options to protect against a %10 decline in BRK, that would be a hedge fund. Buying the puts is a hedging position, but I would say that such an investment would be damn conservative, and certainly in line with Buffett's investments strategy. (He cautions against derivatives, but covering a long position with puts isn't what he means.)