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Wednesday, Nov 30, 2022

Musk Leads 2020 LA Billionaires Thanks to Massive Gain

Despite a global pandemic and one of the most tumultuous economic environments in modern history, one group of Americans has done surprisingly well in the past year. 

U.S. billionaires have seen their wealth grow by roughly 20% since mid-March, according to a report by the Institute for Policy Studies and Americans for Tax Fairness. 

“It’s kind of a cliché, but the rich are getting richer,” said Brock Moseley, founding partner at Sawtelle-based money manager Miracle Mile Advisors. “This has been a great period of time for them with tons of deregulation (and) low interest rates.” 

Those factors are reflected in the Business Journal’s 2020 list of Wealthiest Angelenos. Together, the 50 billionaires who comprise this year’s group registered an estimated net worth of $288 billion, a whopping 30% increase over the 2019 total of $221 billion.

Despite the year-over-year increase, the price of admission for membership in the 2020 edition of the Wealthiest list actually declined. Last year, the entry point for the top 50 was $1.5 billion. This year, because of a variety of shifting elements, the floor is $1.2 billion. 

Elon Musk tops the Wealthiest list for the second consecutive year, following an eye-popping surge that saw his personal fortune explode to $75 billion as of Aug. 17. That’s an incredible 232% jump from his $22.6 billion mark in 2019. 

While the gains over the past 12 months have not been uniform, many billionaires with fortunes in areas like technology and private equity have logged significant boosts to their net worth. 

The tech-heavy Nasdaq exchange, where local tech titans like Musk have their businesses listed, rose roughly 46% between August 2019 and the same month this year. 

“There are certain industries that dominate in the billionaire circuit,” Moseley said. “In the past, those were things like energy. Today, that has migrated to biotech and technology.”

Moseley said the Covid-19 pandemic has accelerated the adoption of technology among companies and consumers alike. This, he explained, has helped further boost the fortunes of billionaires with large technology holdings.

Biotechnology, in particular, has benefited from the black swan events of 2020. “Those areas were innovative, and there was growth last year,” Moseley said. “But when this pandemic came to the fore, a lot of those (biotech) companies just got turbocharged.”

That description certainly applies to Musk, who heads a range of technology businesses from Tesla Inc. to Space Exploration Technologies Corp. 

Musk received his first performance-based payout from Tesla in May, worth more than $700 million, while also benefiting from the stock’s skyrocketing value — up more than 330% between Jan. 1 and Aug. 17. 

“Retail investors are drawn to visionaries with game-changing outlooks,” Moseley said. “No one epitomizes that more than Elon Musk.” 

“There is almost a cult-like following for what Tesla is doing,” he added. “There’s just this feeling that you don’t bet against Elon.”

Other big winners on this year’s list include biotech innovator and media mogul Patrick Soon-Shiong, who saw his fortune jump 14% to $21.8 billion, thanks largely to gains by his medical companies. That was good for the No. 2 spot on the 2020 ranking.

Longtime entertainment icon and noted philanthropist David Geffen, No. 4 on this year’s list, saw a jump in his personal fortune of 28% to $11.8 billion, fueled by his large stake in Apple Inc., which has seen a remarkable runup in its stock price since the start of 2020.

Beyond the technology limelight, wealthy Angelenos with well-positioned private equity holdings have also enjoyed gains in the last year. Tom Gores, founder of Platinum Equity, and Antony Ressler, co-founder of Ares Management Corp., have seen their estimated net worth increase by 17% and 24%, respectively.

“Over the last few years, there has been a ‘cool factor’ in investing in private markets,” said Davide Accomazzo, chief investment officer at wealth manager Thalassa Capital and a professor of finance at Pepperdine University. 

“That might seem like a silly comment,” he said, “but financial markets are greatly driven by behavioral biases. … I can assure you that has been a big driver attracting people to private equity.”
In addition, Accomazzo said that what might have been considered a traditional weakness of private equity has become a strength under the new pandemic paradigm. 

Long investment horizons — leaving capital locked away, for sometimes a decade or more — have shielded some private equity investments from the worst of the economic downturn. 

“That can be a huge advantage to you as an investor,” Accomazzo said, “especially if you are someone like a pension fund.”

Other investment fields have fared less well under the pandemic. With retail, hospitality and entertainment all devastated by Covid-19 shutdowns, the value of commercial real estate fell 10% year over year between June of last year and this year. Investors with major holdings in this space have seen returns on these properties fall more than 6% over that same period, according to the Commercial Property Price Index.

Despite this, the depressed conditions in that sector could prove to be a prime investment opportunity for some billionaires.

“For the savvy guys, they might be looking for opportunities to do big investments now and are planning on a turnaround later on,” said Dean Kim, an executive director at Playa Vista-based brokerage William O’Neil & Co. 

“Coming out of the Covid situation, if they were able to pick up some good commercial property they could make a great return,” Kim added. “If I were them, I would be looking at those areas that are in a down cycle at the moment.”

According to Accomazzo, many of Los Angeles’ ultra-wealthy were likely also at least somewhat prepared for the Covid crisis. “Nobody was expecting the virus obviously,” he said, “but people were expecting some volatility.”

The late-stage economic expansion, Accomazzo said, drove many local family offices to keep significant portions of their clients’ portfolios in cash to hedge against an anticipated downturn. “We had a much larger cash position going into 2020 than we normally would,” he said.

Going forward, Accomazzo said most of L.A.’s billionaires would likely fare well, regardless of near-term market conditions. “It always depends on the investment horizon one has,” he said. “Very wealthy people always have very long time horizons, sometimes multigenerational.” 

With the ability to make long-term bets, and the capital to invest through a down market, Accomazzo said the ultra-rich tend to find good investments, even in the worst economic conditions.
“This could actually be an opportunity for them,” he said.

Top gainers

The billionaires who saw the biggest increases in their net worth over the past 12 months can be broken into two categories: Elon Musk and everybody else. Musk’s 232% increase dwarfed the next closest top gainer, Edward Roski Jr., who saw his fortune rise 38% to $7.7 billion. Others who saw substantial increasess include Geffen, private equity execs Ressler and Gores, philanthropist Nicolas Berggruen and media exec Jeffrey Skoll.

New and returning names

This year’s list saw the arrival of Marijke Mars, an heiress to the Mars Inc. food empire. Mars ranks No. 8 overall with a net worth of $7.2 billion.

The top 50 club also welcomes back three members who had been included on Business Journal lists in previous years, but fell just short in 2019. This year’s returning billionaires are Kuwait-born businessman Bassam Alghanim, Cargill Inc. heiress Sarah MacMillan and self-made manufacturing company owner Donald Friese.

Leaving the list 

The 2020 list is also notable because two high-profile and longtime members of the Los Angeles billionaire establishment are no longer included. 

Sumner Redstone, who built an entertainment empire that included brands such as Viacom, CBS, Paramount and MTV, died last month at the age of 97. He ranked No. 19 on the 2019 list with $3.7 billion.

Tamara Hughes Gustavson, the largest shareholder in Public Storage Co., has officially decamped her Malibu residence for her horse farm in Kentucky. She was No. 8 on last year’s list at $6.6 billion.

Other names leaving the list for 2020 are Arthur Levine and Lauren Leichtman, the husband-and-wife team behind Beverly Hills-based Levine and Leichtman Capital Partners. The couple, who were No. 36 on 2019’s list with a fortune of $2 billion, moved out of town.

And private equity investor Richard Alan “Ric” Kayne, who ranked No. 42 last year at $1.8 billion, now calls New Zealand home. 

Wealthiest Angelenos by the Numbers

  • Total Estimated Wealth 2020: $288 billion
  • Total Estimated Wealth 2019: $221 billion
  • Total Year-Over-Year Percentage Change: +30%
  • Biggest Gainer: Elon Musk (232%)
  • Biggest Decliner: Peter Thiel (-22%)
  • Number of Individuals on the List: 47
  • Number of Couples on the List: 3
  • Average Age: 68
  • Median Age: 71
  • Oldest Member: George Joseph (98)
  • Youngest Member: Evan Spiegel (30)

About the Wealthiest Angelenos List

As in past years, when compiling the Wealthiest Angelenos list, every effort is made to ensure that the information is as accurate as possible.

The Business Journal’s editors and reporters conduct months of extensive research into the individual holdings of each candidate before determining exactly which billionaires qualify for the list and where they rank.

Some of that information is supplied directly by the individuals or members of their teams. Data is also collected through public filings and documents, as well as through conversations with experts in relevant fields.

The Business Journal’s calculations for the list are based on a range of factors, including each billionaire’s holdings in stocks, bonds, private equity, venture capital, real estate, art collections and more.

All members of the Wealthiest Angelenos list must reside in L.A. County.

Return to the 2020 edition of the Wealthiest Angelenos. 


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