The Chinese entrepreneur who made US$16 million from a lunch with Warren Buffett

A Chinese entrepreneur who paid US$2.1 million in a charity auction to have lunch with Warren Buffett appears to have made a tidy profit on the deal.

Zhao Danyang bought the lunch with the Oracle of Omaha last year and sat down to eat with the veteran investor on 24 June at Smith & Wollensky steakhouse in New York.

But before the lunch, Zhao told the media he would offer Buffett a stock tip of his own: a little-known Chinese retailer called WuMart.

Chinese investors seized on Zhao’s comments and immediately started buying the stock, perhaps in the hope that Buffett himself would take a stake after finishing his steak.

By the time Zhao returned to China, shares in WuMart had climbed 25%, increasing the value of Zhao’s personal stock holdings in WuMart by about US$16 million more.

Suddenly, the US$2.1 million that Zhao shelled out for his special lunch doesn’t look like a bad investment.

The Chinese investor has denied claims that he tried to pump up the share price of WuMart, which he told The New York Times will one day be as big as American retail giant WalMart.

“I didn’t want to influence the market,” Zhao told The New York Times over the weekend. “It was just a tip from a friend.”

He says he doubts Buffett will ever read the WuMart annual report that Zhao passed on during the lunch.

“I don’t think Buffett will invest in this company. Every day, he can look at thousands of companies.”

Buffett might never buy into WuMart, but with one clever comment Zhao has ensured that investors right across the world know the retailer’s name.