The gaming industry struggled through 2009 and a recovery is expected to be sluggish at best.

Yet Kirk Kerkorian, with heavy investments in casino operator MGM Mirage, managed to net a cool $1 billion in the past year.

Television ad revenue is down, eating into media conglomerates’ revenues. Yet Sumner Redstone, the media mogul behind CBS Corp. and Viacom, pulled in $1.1 billion.

Spending in the tech sector hit bottom in late 2009 and a recovery is nascent at best. Yet John Tu, who founded memory chip maker Kingston Technology, raised his net worth by $1.2 billion.

Such is the paradox with many of L.A.’s wealthiest residents.

The recovery of the economy is expected to be long and slow, yet even modest rebounds from recessionary lows has meant dramatic increases in the net worth of L.A.’s wealthiest.

Indeed, nearly everyone on the Business Journal’s Wealthiest Angelenos list saw a rise in their net worth – gains of 10 digits, in some cases.

“What you’re seeing is more of a return to normalcy,” said Lon Morton, chief executive of investment adviser Morton Capital Management, a Calabasas firm catering primarily to high-net-worth individuals in the L.A. area. “We’ve come back a long way from where we were.”

In absolute terms, L.A.’s wealthiest residents were some of the biggest losers during the financial crisis, watching billions bleed from their accounts. But in the past year, they have been the biggest gainers.

The cumulative net worth of L.A.’s wealthiest climbed to $93 billion. The 14 percent gain actually trailed the overall markets, but in total dollars the gains were astronomical.

Famed investor Charles Munger, for one, earned $300 million thanks to his stake in Berkshire Hathaway. Developer Alan Casden, meanwhile, rode the rise in real estate values to a $450 million gain.

For the savviest investors, there is still money to be made.

Retired cable industry executive Marc Nathanson, an admittedly conservative investor, has been looking for real estate deals and is now snapping up industrial properties through his family’s firm, Mapleton Investments.

“We’re in the business of preserving capital, (but) we think there are opportunities,” he said. “If we find opportunities at discount from financial institutions or others, we are cash buyers.”

Indeed, opportunism is now the name of the game for many of L.A.’s wealthiest.

“People are looking for opportunity,” said Morton, “especially in the real estate area.”

Plumbing the depths

The catastrophic upheaval in the economy has left many assets – from real estate to traditional operating companies – at heavy discounts from values just a couple of years ago.

Real estate investor Thomas Barrack J, chief executive of Colony Capital in Santa Monica, and private equity titan Tom Gores, who heads Platinum Equity in Beverly Hills, are known to plumb the bottoms of markets for good deals – and it’s no surprise that each has been among the most active investors in the past year.

But even those who aren’t traditionally opportunists are getting into the game. Like Nathanson, Donald Sterling said he is looking for value in the real estate market and is ready to grab it when he finds it.

“We have a large cash situation so we’d like to buy hard assets,” said Sterling, whose large portfolio of apartment buildings helped push his net worth up to $1.8 billion.

Still, the superaffluent are not putting all their money in new deals. In fact, many are favoring conservative, reliable investments, such as California municipal bonds.

Private equity titan Alec Gores, for one, said a portion of his estimated $1.8 billion of wealth is in munis. This trend was presaged by biotech entrepreneur Patrick Soon-Shiong’s bond-buying last year. In March, L.A.’s wealthiest individual bought $1 billion in state infrastructure bonds.

Rebecca Rothstein, an L.A.-based financial adviser for Morgan Stanley Smith Barney, said the move toward munis is a surprising one for wealthy investors who have traditionally favored more complex instruments.

“These are not traditional municipal bond buyers,” Rothstein said. “They’ll typically have an asset allocation to that, but it won’t dominate their portfolios. Now it’s dominating.”

In an uncertain investment landscape, she said, the conservative bonds have gained favor because they offer a reliable, tax-free income stream.

Another popular investment is master limited partnerships – such as private equity firm Blackstone Group – which have particular tax benefits.

“Most people who are truly wealthy want to have their income come to them in as much of a tax-favored or tax-free manner as possible,” she said.

Tax burden

The public got a glimpse of just how true that is after Frank and Jamie McCourt, the husband and wife owners of the Los Angeles Dodgers, filed for divorce late in 2009.

According to documents filed in Los Angeles County Superior Court, the pair earned $108 million between 2004 and 2009, yet did not pay a cent in income taxes. The McCourts were able to structure their business ventures in a way that allowed them to carry forward tax losses from previous years in their commercial real estate business, thereby offsetting income earned during those later years.

But tax maneuvering can lead to trouble.

Media mogul Haim Saban is locked in a legal battle with his former tax attorney, Matthew Krane, over an illegal tax shelter arrangement that led to an indictment for Krane and forced Saban in 2007 to pay $250 million in back taxes.

Taxes have always been a concern for wealthy individuals, but if anything they are becoming more so.

The recession and ballooning federal budget deficit is one reason President Obama recently opted not to renew the so-called Bush tax cuts – temporary tax breaks for high wage earners enacted under President Bush – which are set to expire this year.

“There’s probably more concern (about taxes) than I’ve ever seen in my 42 years in the business,” said Merrill Lynch investment adviser Tetsu Tanimoto, who also noted there is uncertainty surrounding the future of the federal estate tax.

There’s also questions about another area of tax law important to the ultrawealthy: charitable giving. The administration is proposing a 28 percent cap on charitable gifts that can be claimed as a tax credit, down from 35 percent. The changes would go into effect Jan. 1 if adopted by Congress.

Even without the change, Rothstein estimated that donations by wealthy individuals are down more than 25 percent.

“We’re not seeing anywhere near the level of giving that we were seeing in 2007 and 2008,” she said.

Some of the area’s wealthiest donors may try to pick up the slack, however. According to a recent report by the Economist Intelligence Unit Ltd., the highest of the high net worth expect to maintain or increase their philanthropic giving, in part to compensate for the decline in overall donations.

L.A.’s wealthiest resident, biotech entrepreneur Soon-Shiong, has raised his profile in the philanthropic community over the past two years through the establishment of a foundation with his wife, Michele Chan. In November, the couple announced a $100 million pledge to help reopen the troubled Martin Luther King Jr. Hospital.

In an interview at the time, Soon-Shiong said he felt compelled to help because in this economy, large amounts of capital for efforts like that were hard to come by. He hopes others with the means to help will contribute to the effort to improve medical care.

“My hope is that this could catalyze other philanthropists to stand up and participate,” he said.

Signs of life

Yet even as philanthropy was taking a hit last year, the fine art market, which had seen sharply lower prices for works by even name artists, was staging a comeback.

Earlier this month, Jasper Johns’ seminal “Flag” painting, from the estate of late L.A. novelist Michael Crichton, commanded $28.6 million at auction – well above the estimate and a near record for the sale of a work by a living artist.

The auction, along with several other noteworthy sales, is good news for some of L.A.’s wealthiest, who have significant interests in the art world.

Eli Broad, for one, has more than $1 billion of his wealth tied up in art. One of L.A.’s highest-profile arts backers, Broad has kept the city rapt over his plans for a new museum to house his art collection. While Santa Monica is vying for the museum, Broad recently indicated that he thought it woudl draw better in downtown Los Angeles.

Still, for all the gains, the economy remains on shaky ground. Unemployment remains high. Retail and manufacturing data are less than promising. Europe’s troubles threaten to undermine whatever recovery the American economy can muster.

Yet it was this kind of environment that allowed Howard Marks, the chairman and co-founder of Oaktree Capital Management, to record a 20 percent gain in his net worth over the past 12 months. He is now worth an estimated $920 million.

His downtown L.A. investment firm rode the markets to unexpectedly strong returns in a variety of asset classes, including equities, distressed debt and real estate. It followed a year in which Marks saw his net worth slashed by half.

“Most people would say that the security prices got ahead of fundamentals,” he said. “You look at ’09 – you say the fundamentals of the world’s economies are still kind of lackluster and yet most asset classes in our businesses had the best returns in history. Nobody was expecting that kind of gain in ’09.”

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&#8226 Read the sidebar: List of Wealthiest Reflects Broad Gains of Rebound.

&#8226 View the full Wealthiest Angelenos 2010 list ranked by net worth.

&#8226 View the full Wealthiest Angelenos 2010 list ranked by changes in net worth.

&#8226 Check out the: Los Angeles Business Journal Special Section page.