Alwaleed’s Kingdom Beats Buffett on Hidden Treasures

A five-month rally by Kingdom Holding Co. is giving lift to the investment record of Prince Alwaleed bin Talal Al Saud, the world’s 18th-richest person and self-proclaimed “Warren Buffett of Saudi Arabia.”

Alwaleed’s recent bets on San Francisco-based microblogging company Twitter Inc. and Beijing-based online retailer Inc., as well as potential public offerings of hospitality companies Four Seasons Hotels Inc. and Fairmont Hotels & Resorts Inc., have helped reverse a slump that has weighed down his publicly traded holding company since the 2008 global financial crisis.

“We have hidden treasures, lots of rich assets that aren’t publicly traded,” Alwaleed, 58, said by phone from Crans-Montana, Switzerland, where he was vacationing with his family. “They are worth more than $11 billion to $12 billion, and the market could value them at more than double that.”

Kingdom, 95 percent-controlled by Alwaleed, has risen 52 percent since its 52-week low on Sept. 5, against a 7 percent increase for the Standard & Poor’s 500 Index. The jump increased his net worth by 26 percent, or $6.6 billion, according to the Bloomberg Billionaires Index, while Buffett’s fortune and his Berkshire Hathaway Inc. stock were about flat.

Buffett is the world’s fourth-richest person, with a fortune valued at $57.8 billion. The billionaire’s lead on the Bloomberg ranking is safe, according to Alwaleed, who said he doesn’t expect to pass his “role model” anytime soon.

‘Way Ahead’

“Remember last year, in 2013, Buffett was one of the biggest gainers on the stock exchange, way bigger than me,” he said. “You can’t look at only four, five months. I still say Buffett is way ahead of me.”

Alwaleed’s rise comes after earlier investment blunders, including selling Apple Inc. shares in 2005, holding onto Citigroup Inc. during the financial crisis, and losing $200 million after investing in WorldCom Inc. in 2000.

“By his own admission, the prince makes good and bad choices,” said Riz Khan, author of “Alwaleed: Businessman, Billionaire, Prince,” a biography published in 2005. “However, his initial decision-making is based on fairly sound information and long-term analysis.”

Citigroup, in which Riyadh-based Kingdom had a 4 percent stake, according to a July 2007 offering prospectus, has dropped more than 90 percent since then.

“It’s behind us,” he said of Kingdom’s Citi investment.

Steve Jobs

In 2005, Alwaleed sold most of the stake in Apple he’d acquired in 1997, telling Bloomberg News in an interview that any upside in the iPod and Steve Jobs’s efforts “have already been put in the price.”

The billionaire refused to call the Apple sale a mistake, and said he invested the proceeds in Saudi real estate projects that have equaled Apple’s sevenfold return over the eight years. Valuing Saudi property is difficult because land transactions in Saudi Arabia aren’t taxed or reported by the government.

From its July 29, 2007, offering price of 10.25 riyals ($2.73), Kingdom has returned 134 percent against Apple’s 269 percent. The company makes up more than two-thirds of Alwaleed’s $32 billion fortune, according to the Bloomberg ranking.

After an initial spike, Kingdom began to slide in trading after the company’s IPO. By November 2008, it had dropped below 9 riyals, surpassing the offering price on only two brief occasions during the following three years. The shares began to climb in the second half of 2012 after Kingdom reported improved results from its real estate and equity investments.

‘Sold Nothing’

“When I went public in 2007, I committed nothing of my shares,” Alwaleed said. “I said I’d remain a 95 percent shareholder of my company. Since then, I’ve sold nothing, not a single share, nothing. Zero.”

The company’s market value is obscured by the fact that only 5 percent of its shares are traded and, according to data collected by Bloomberg, no analysts cover the company.

Since September, anticipation about Twitter’s public offering has been partly responsible for Kingdom’s rise, according to Alwaleed. Twitter tumbled a record 24 percent on Feb. 7 after its first earnings report since since the offering showed slowing usage and user growth. In December, Alwaleed said the value of his Twitter stake had quadrupled to $1.2 billion.

“Kingdom is one of the most globally diversified investment options available to Saudi investors,” said Mohannad Aama, chief investment officer at Beam Capital Management in New York. “Optimism over some of Kingdom’s high-profile investments, such as Twitter, while small, has led to even more optimism.”

Four Seasons

Alwaleed, who owns Bloomberg TV’s partner channel in the Middle East, is pushing for future offerings, including Beijing-based online retailer, in which he bought an undisclosed stake for $125 million. The company filed a prospectus in January to raise $1.5 billion in a public offering, only one of several investments Kingdom will be “unleashing,” he said.

“We’re pushing all the companies we’ve invested in -- Four Seasons, Fairmont,, all the projects in Saudi Arabia -- towards monetization,” Alwaleed said. “I don’t want use the word IPO, monetization. It could mean going public, could mean mergers and acquisitions. Those are our jewels and they are really incredible names in their arenas.”

Kingdom closed down 0.2 percent at 23.95 riyals today in Riyadh.

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