Morgan Creek Digital Follows Warren Buffett’s playbook, With $1 Million Bet Against the S&P 500


Morgan Creek Digital, the U.S based asset manager, is betting $1 million that its digital currency index is going to outperform the S&P 500 in 10 years. This bet is similar that of Warren Buffett’s popular wager. Buffet bet on the S&P. He bet that an index fund is going to outperform 5 actively managed hedge funds. Buffet won the bet and donated his $1 million rewards to charity in 2017.

Morgan Creek Digital, in a similar fashion, is recreating Buffett’s $1 million wager from two years ago pitting the S&P 500 against several hedge funds. However, unlike the Buffett, Morgan Creek isn’t betting for the S&P placing its faith in the performance of cryptocurrencies over 10 years.

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The Challenge Buffett 2.0

The digital asset manager calls the move the challenge Buffett Bet 2.0,” and invites other investors who believe in the S&P 500 to take the opposite bet. Morgan and Creek’s co-founder partner, Anthony Pompliano said anyone who bets for the other side would be someone who has a similar outlook as Buffett. He insists that it may be someone who’s is bullish about the S&P 500 or a party that believes digital assets are overvalued or worthless. Pompliano in an interview with CNBC said:

This is a collaboration of our outlook not just for the upside of virtual currencies but the outlook on public equities as well; many people might see this and think we’re bullish on cryptocurrency. However, you need to consider the asset we are going up against. Public equities are not exactly in their all-time highs as well.”

Pompliano cited the recent losses is in FANG’s stocks as well as other investor favorites. The stocks of the once high-flying startups have taken a beating in recent months, with Facebook down by 24% year over year.

FANG’s Losses Look Minor Compared to Digital Assets

The losses recorded by FANG and other investor favorites still look minor compared to that of digital currencies. Bitcoin (BTC) in particular, was down 37% in November alone. The token has dropped up to 73% this year alone after almost getting to the $20,000 level last December.

Mark Yusko co-foundedMorgan Creek. Yusko was a former chief investment officer at the University of North Carolina. The index fund, which is the result of a collaboration with Bitwise, provides accredited investors and high net-worth people access to a number of the top digital currencies by market cap. According to Pompliano, the index fund, which requires a $50,000 minimum investment, was designed to offer the S&P similar exposure with cryptocurrencies.

Morgan Creek Digital are Funding Their Bet Like Buffett

Buffett, who called virtual currencies “rat poison squared recently,” took a $1 million bet against Protégé Partners last year. The billionaire investor staked his money that a passive investment into the S&P 500 would outperform five actively managed hedge funds. He won the bet, with the S&P returning 7% compound annually versus a 2.2% from the hedge funds involved.

Like Buffett, Morgan Creek Digital are personally funding their own side of the bet and insisting that they wouldn’t rely on the funds. However, the company still needs whoever takes the other side of the bet to accept, although Pompliano insists that the winner must donate their proceeds to charity.



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