Daily Equity Report

The 2009 edition of the billionaires* list, which is compiled annually by Forbes is considerably shorter than the 2008 list. This isn’t surprising given the global financial crisis that we are currently experiencing. Most billionaires have a substantial portion of their wealth invested in equity, or equity like investments.

This is the first year since 2003 that the number of billionaires has dropped, which is understandable as global markets (particularly emerging markets) were in a bull phase for much of the 2003 – 2008 period. The drop in numbers is striking though, there are 793 US dollar billionaires as at 13 February when compared to 1 125 at the same time last year. This is a massive drop of nearly 30%, but compares favourably with the MSCI World Equity Index which dropped -43% in USD over the same period.

This year saw 373 billionaires from last year falling off the list, and only 41 joining the billionaire club, so clearly there were some people who were able to grow their capital despite the economic hardships. One of the 44 billionaires to increase their net worth was Oprah Winfrey who is now worth $ 2.7bn.

Of particular interest was the re-instatement of Bill Gates to the top of the list (after briefly being ousted by friend Warren Buffett last year) despite losing $ 18bn over the period. Buffett lost $ 25bn and Mexican telecom mogul Carlos Slim also lost $25bn and dropped from second to third on the list. The largest loser (in terms of net worth) was Reliance’s Anil Ambani who lost $ 32bn of his wealth, but is still worth $ 10.1bn.

The same 3 South African residents that were on the list last year made it onto the list again. Nicky Oppenheimer and family were again listed with the highest net worth, and moved up the list from 173 last year to number 98 this year, despite their net worth declining from $ 5.7bn to $ 5bn. Patrice Motsepe, the self made mining magnet moved past Johan Rupert and family to move into second on South Africa’s list (net worth of $ 1.3bn, down from $ 2.4bn). The Rupert’s net worth is down from $ 3.8bn to $ 1.2bn as a result of the falling stock price.

A fourth South African (although not resident) failed to make the list this year. Donald Gordon’s net worth was up at $ 2bn last year, but the decimation in property prices over the past year has seen him fall off the list. Another, more famous Donald involved in property, Donald Trump managed to stay on the list, but he is now ‘only’ worth $ 1.6bn.

While these billionaires may have lost a lot of money, they won’t be struggling to pay their rent. However, CEO of Forbes Magazine Steve Forbes pointed out that this list gives an indication of global struggles. He was reported as saying "Billionaires don't have to worry about their next meal, but if their wealth is declining and you're not creating numerous new billionaires, it means the rest of the world is not doing very well." These types of people are also the ones who create large amounts of employment, so if they are struggling you can be sure the rest of the world is too.

By looking closer at the list and the trends over the last year one can get a good sense of what’s been working out in the world, and what has failed spectacularly. The key, however, will be to attempt to identify what the trend going forward will be.

Take care,

Mike Browne
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966

* 1 billion is defined as 1 thousand million, i.e. 1 000 000 000.

Source: http://www.forbes.com/2009/03/11/worlds-richest-people-billionaires-2009-billionaires_land.html