The recent chaos on Wall Street has hit the wallets of some of L.A.’s wealthiest residents.
In particular, American International Group Inc., which virtually melted down last week before its $85 billion federal bailout, was a major investment for some of L.A.’s biggest players: Eli Broad, father-and-son entrepreneurs Leslie and Louis Gonda, and Steven Udvar-Hazy, chief executive of AIG subsidiary International Lease Finance Corp.
Broad, who placed No. 3 on the Business Journal’s list of Wealthiest Angelenos this year with an estimated fortune of $6.9 billion, sold his financial company SunAmerica to AIG for $18 billion in 1999.
He has remained a significant and active shareholder until this year, but he is not required to disclose his holdings and did not return calls requesting comment. However, in June he told the Business Journal that he owned or controlled 27 million shares.
At the time, those shares were worth about $800 million, down from nearly $2 billion as recently as October, when shares topped out at $70.11. At the Sept. 18 closing price of $2.69, those holdings would be worth just $72 million.
Broad raised some eyebrows in June when he penned a strongly-worded letter to the company’s board demanding management changes amid AIG’s continued decline.
“I’m no activist,” Broad told the Business Journal at the time, “but I felt a responsibility to SunAmerica shareholders when I saw this great company, AIG, just deteriorating.”
Shortly thereafter, AIG Chief Executive Martin Sullivan stepped down. He was replaced by Robert Willumstad, who was forced out last week in the federal bailout.
Like Broad, both Leslie Gonda and his son, Louis, maintained significant stakes in AIG after selling their company to the insurance giant. The Gondas, Hungarian immigrants, helped start ILFC with fellow countryman Udvar-Hazy in 1973. In 1990, AIG acquired Los Angeles-based ILFC, a top aircraft leasing company, for $1.8 billion.
As of April, Louis Gonda held 19.9 million shares, placing him 35th on the Business Journal’s list with an estimated net worth of $1.1 billion boosted by other investments. That was 32 percent lower than 2007, reflecting AIG’s already weakened position.
Leslie Gonda owned 19.4 million shares, placing him No. 47 on the list with an estimated net worth of $840 million.
Neither returned calls for this article, and it’s unclear if they sold their shares. Today, the AIG holdings for each would barely crack the $50 million mark.
Udvar-Hazy, meanwhile, has been active in AIG as he has remained the chief executive of the leasing company. He was ranked No. 11 on the Business Journal’s list with an estimated net worth of $2.9 billion based on his AIG holdings and other investments.
His 30 million AIG shares were valued at $1.4 billion in April and would have since fallen to about $80 million. Given his position at the aircraft leasing subsidiary, Udvar-Hazy seems the least likely to have unloaded shares, though he may have been forced to as part of a hedge to protect his wealth.
It’s been reported that he is leading a behind-the-scenes effort to buy ILFC back from AIG. ILFC is one of the most attractive and profitable businesses owned by AIG, which will likely be selling many non-core units.
