Billionaires Worth $1.9 Trillion Seek Advantage in 2013

Photographer: Daniel Acker/Bloomberg

Warren Buffett, chairman of Berkshire Hathaway Inc., right, and Bill Gates, chairman and co-founder of Microsoft Corp., participate in a newspaper toss event at the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska, on May 5, 2012. Close

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Photographer: Daniel Acker/Bloomberg

Warren Buffett, chairman of Berkshire Hathaway Inc., right, and Bill Gates, chairman and co-founder of Microsoft Corp., participate in a newspaper toss event at the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska, on May 5, 2012.

The richest people on the planet got even richer in 2012, adding $241 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 100 wealthiest individuals.

The aggregate net worth of the world’s top moguls stood at $1.9 trillion at the market close on Dec. 31, according to the index. Retail and telecommunications fortunes surged about 20 percent on average during the year. Of the 100 people who appeared on the final ranking of 2012, only 16 registered a net loss for the 12-month period.

“Last year was a great one for the world’s billionaires,” said John Catsimatidis, the billionaire owner of Red Apple Group Inc., in an e-mail written poolside on his BlackBerry in the Bahamas. “In 2013, they will continue looking for investments around the world -- and not necessarily in U.S. -- that will give them an advantage.”

Amancio Ortega, the Spaniard who founded retailer Inditex SA, was the year’s biggest gainer. The 76-year-old tycoon’s fortune increased $22.2 billion to $57.5 billion, according to the index, as shares of Inditex, operator of the Zara clothing chain, rose 66.7 percent.

“It’s an amazing company that has done great and the gains are quite justified given its performance,” said Christodoulos Chaviaras, an analyst at Barclays Plc in London who’s had an “equalweight” rating on Inditex for about a year. “Can they repeat that? It will be harder. A lot of the positive news is already reflected in the share price.”

Source: Inditex via Bloomberg

Amancio Ortega, chairman Inditex SA. Close

Amancio Ortega, chairman Inditex SA.

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Source: Inditex via Bloomberg

Amancio Ortega, chairman Inditex SA.

Market Performance

Global stocks soared in 2012. The MSCI World Index gained 13.2 percent during the year to close at 1338.50 on Dec. 31. The Standard and Poor’s 500 Index rose 13.4 percent to close at 1426.19.

European stocks surged in the second half of the year. The Stoxx Europe 600 is up 19.6 percent since June 4, advancing as the European Central Bank introduced bond-buying programs, S&P upgraded Greece’s debt and German business confidence rose more than forecast. The benchmark gauge’s 14.4 percent advance for the year was the best annual return since 2009.

Carlos Slim, the telecommunications magnate who controls Mexico’s America Movil (AMX) SAB, maintained his title as the richest person on Earth for the entire year. The 72-year-old’s net worth rose $13.4 billion -- or 21.6 percent -- through Dec. 31, making him the second-biggest gainer by dollars.

Gains by Slim’s industrial conglomerate, Grupo Carso SAB, and Grupo Financiero Inbursa, his banking and insurance operation, more than offset the decline posted by America Movil, his biggest holding. The largest mobile phone operator in the Americas by subscribers fell 5.8 percent to close at 14.9 pesos at the end of the year.

‘Wireless Penetration’

“America Movil is no longer the growth story that it has been, given the increase in Latin American wireless penetration over the last five years,” said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore, Maryland. “It continues to generate a very high amount of cash flow and has the best set of telecom assets across Latin America.”

According to King, one of Slim’s biggest challenges will be dealing with regulation in Mexico and Colombia designed to punish or even-out the market share between America Movil and its competitors. Of the 14 analysts who cover the stock, 71 percent have a buy rating on the company, with an average target price of 19.15 pesos per share, according to data compiled by Bloomberg.

Higher Taxes

U.S. software mogul Bill Gates, 57, ranks second on the list, trailing Slim by $12.5 billion. The Microsoft co-founder added $7 billion to his net worth as shares of the Redmond, Washington-based company rose 2.9 percent. Microsoft stock accounts for less than 20 percent of the billionaire’s fortune.

Warren Buffett, 82, lost his title as the world’s third- richest man to Ortega on August 6. The Berkshire Hathaway chairman gained $5.1 billion during the year, even after donating 22.3 million Berkshire Class B shares in July to charity. The billionaire, who has pledged to give away most of his fortune, spent much of the year pressing for higher taxes on the wealthy.

“On incomes of over $1 million, the excess $1 million should have a minimum tax of 30 percent. And then over $10 million, 35 percent,” Buffett said in an interview with Charlie Rose in November. “Tax law should be progressive. And I think that when people make $15 million or $20 million or $200 million and pay a 10 percent rate, something should be done about it.”

IKEA founder Ingvar Kamprad, 86, is the world’s fifth- richest person with a $42.9 billion fortune. The complex ownership structure behind IKEA, the world’s largest furniture retailer, became more transparent in August after IKEA’s franchisor published its financial performance publicly for the first time. His net worth rose 16.6 percent in 2012.

‘Delivering Results’

Brazil’s Eike Batista, 56, was the year’s biggest loser by dollars, falling $10.1 billion. The commodities maven, who vowed a year ago that he’d become the world’s wealthiest man by 2015, sold a 5.63 percent stake in his EBX Group Co. in March to Abu Dhabi’s Mubadala Development Co.

As part of the deal, he pledged an unspecified additional stake in 2019 if he fails to meet a 5 percent annual return on the sovereign wealth fund’s $2 billion investment, according to a person with knowledge of the deal. Batista now ranks 75th in the world with a $12.4 billion net worth. On March 27, he was worth $34.5 billion and ranked 8th on the Bloomberg index.

“Next year is going to be a lot of work for Eike,” said Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos in Porto Alegre, Brazil. “It’s going to be a year for him to recover investors’ confidence, and to leave the realm of theory and start delivering results. The EBX companies have great growth potential.”

Hidden Billionaires

Batista’s former title as the richest Brazilian is now held by 73-year-old banker Jorge Paulo Lemann, who ranks 37th on the index with an $18.8 billion fortune. The country’s second- richest person is Dirce Camargo, the matriarch behind Camargo Correa SA, the Sao Paulo-based conglomerate that has interests in cement, electricity and Havaianas flip-flops. Her net worth is $13.4 billion, according to the Bloomberg ranking.

Camargo, who doesn’t appear on any other major international wealth ranking, is one of 54 billionaires the index uncovered during the year. Among the others: Hamdi Ulukaya, the 40-year-old Turkish immigrant owner of Chobani, the best-selling yogurt brand in the U.S.; South Africa’s Nathan “Natie” Kirsh, 80, who amassed a $5.4 billion fortune in retail and real estate; and Elaine Marshall, 70, whose 14.6 percent ownership of closely held Koch Industries makes her the fourth-richest woman in America. She is worth $14.1 billion.

Buying Lanai

Koch Industries’ two other shareholders, the brothers Charles and David Koch, are each worth $40.9 billion, up 20.9 percent -- $7.1 billion -- for the year.

Oracle Corp. (ORCL) founder Larry Ellison rose $6.4 billion in 2012 as shares of the world’s largest database company jumped 31.7 percent. Ellison, 68, who has more than tripled the amount of Oracle stock he has pledged against lines of credit in the last year, agreed to buy 98 percent of Hawaii’s Lanai island. The 141-square-mile (365-square-kilometers) parcel with no traffic lights was purchased from billionaire David Murdock, the 89-year-old chairman of Dole Food Co., the world’s largest producer of fresh fruit and vegetables.

The bulk of Ellison’s fortune comes from his 23.5 percent stake in Oracle. He also has interests in software makers NetSuite Inc. (N) and LeapFrog Enterprises Inc. (LF), as well as property holdings, including estates in California and Newport, Rhode Island.

Champagne, Handbags

“Oracle continues to innovate,” said Yun Kim, an analyst at Janney Montgomery Scott in New York. “They’re well positioned in the near-term with their core database offerings, their engineering systems, and cloud computing.”

Kim has a buy rating on the stock with a target price of $43 per share. Of the 43 analysts who cover Oracle, 29 have a buy rating and 14 have holds, according to data compiled by Bloomberg.

Bernard Arnault, France’s richest man, gained $8.1 billion as shares of LVMH (MC) Moet Hennessy Louis Vuitton SA and its publicly traded holding company Christian Dior SA soared.

In May, the LVMH chairman’s net worth was lowered $15 billion on the index because of the way his ownership stake in the world’s largest luxury-goods company is structured. The 63- year-old controls 46.5 percent of LVMH’s share capital, according to the 2011 annual report of the Paris-based maker of Louis Vuitton handbags and Moet & Chandon champagne. That figure includes 5.6 percent of LVMH shares held by Arnault, and a 40.9 percent stake of the company owned by Christian Dior.

Retails Roars

Arnault, who is applying for Belgian citizenship for “personal” reasons, owns 70.4 percent of Christian Dior, according to French regulatory filings. The remaining 29.6 percent of Dior is held by outside investors. While he controls all the voting power of Dior’s stake in LVMH, his economic interest is less than the figure reported in the LVMH annual report. His net worth is valued at $28.8 billion.

Retail fortunes rose 19.5 percent on average, while non- retail fortunes increased 11.5 percent. Amazon.com Inc. (AMZN) chief executive Jeff Bezos, 48, added $6.9 billion to his net worth as shares of the world’s largest online retailer rose 45 percent. The four heirs to the Wal-Mart Stores Inc. (WMT) fortune -- Jim Walton, Christy Walton, Alice Walton and Rob Walton -- gained a combined $13.5 billion. Stefan Persson, the chairman of Swedish clothing retailer Hennes & Mauritz AB, added $2.7 billion.

Macau Winnings

Sheldon Adelson, gambling’s richest man, gained $2.8 billion. The 79-year-old chairman of Las Vegas Sands Corp. (LVS), which operates casinos in Macau, Singapore and the U.S., received $1.2 billion in December when the company paid a special dividend of $2.75 per share. More than half of the company’s revenue comes from Macau. Shares of the company were up 6.9 percent at 10:12 a.m. in New York, pushing Adelson’s stake up $1.4 billion.

Lui Che Woo, the founder of Galaxy Entertainment Group Ltd., was the biggest winner on the index by percentage gain. His fortune more than doubled to $11.9 billion. The company plans to invest as much as HK$50 billion ($6.5 billion) to expand a Macau resort as the casino operator seeks to draw more Chinese tourists in the world’s largest gambling hub.

Asia’s richest man, Li Ka-Shing, rose $6.4 billion. The 84- year-old chairman of Hong Kong property developer Cheung Kong Holdings Ltd. ranks 11th on the list with a net worth of $28.6 billion.

China’s Richest

Zong Qinghou, head of China’s third-largest beverage maker, became the country’s richest man in September after disclosing his stake in closely held Hangzhou Wahaha Group Co. was more than double previous estimates.

The 67-year-old soda and juice tycoon owns more than 80 percent of Wahaha, the company’s spokesman Shan Qining said. Zong’s net worth is $15.8 billion, according to the Bloomberg ranking. He is $8.4 billion wealthier than Robin Li, founder of Baidu Inc. (BIDU), China’s biggest search engine operator.

Facebook founder Mark Zuckerberg lost $5.2 billion during the year after the company’s shares fell 30 percent following its May initial public offering. Investors sued Facebook, the operator of the world’s largest social network, after its stock dropped in the wake of what was the largest technology IPO in history. The investors claim the Menlo Park, California-based company failed to disclose discussions it had with underwriters’ analysts about advertising revenue.

‘Concierge Services’

In December, the 28-year-old donated almost $500 million in Facebook stock to the Silicon Valley Community Foundation. The gift to the nonprofit group, which had $2 billion in assets in 2011, is to “lay a foundation for new projects,” Zuckerberg said in a statement posted on his Facebook page.

The executive and his wife, Priscilla, signed a pledge two years ago committing the majority of their wealth to charity. He is worth $12.3 billion.

“In 2012, high net worth people focused on the things they could control: lifestyle and concierge services, managing their art collections and family security,” said Armand Del Medico, a wealth adviser for UBS Financial Services, in an e-mail. “Looking forward, there is more of an appetite to look at opportunities outside of traditional investments and increased global exposure.”

The Bloomberg Billionaires Index takes measure of the world’s wealthiest people based on market and economic changes and Bloomberg News reporting. Each net worth figure is updated every business day at 5:30 p.m. in New York. The valuations are listed in U.S. dollars.

To contact the reporters on this story: Matthew G. Miller in New York at mmiller144@bloomberg.net; Peter Newcomb in New York at pnewcomb2@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net

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