PhillyDeals: Even now, some of the rich getting richer
Are we all in this together? When stock prices collapsed last year, even the really rich suffered a bit. Not that they got laid off with no prospects, or lost their insurance, or had to go back to work because their retirement money ran out.
Are we all in this together?
When stock prices collapsed last year, even the really rich suffered a bit.
Not that they got laid off with no prospects, or lost their insurance, or had to go back to work because their retirement money ran out.
More like, they got reseeded downward in the Fantasy League Money Bowl. More than 300 fell off Forbes magazine's yearly list of billionaires, generally because their companies' share prices had collapsed.
Of course, for each one who fell off the chart, someone else rose in the ranks, if only by standing still.
Hansjörg Wyss, 73, is the Philadelphia area's richest man, worth nearly $6 billion, mostly in stock.
Wyss is chairman, ex-chief executive officer, and a major shareholder of Synthes Inc., which employs 10,000 in its Swiss and German labs, its West Chester headquarters and other sites, selling bone screws, implant liners, spinal-repair kits, bone replacements, and other fixes for fractures and deformities.
The Swiss-trained, onetime Chrysler Corp. engineer got his M.B.A. from Harvard (with distinction) in 1965, and he has owned homes near the facilities he's run for Synthes and its predecessors in Chester County since at least the late 1970s, public records say.
We're not sure how much time he spends there, especially since retiring from active duty as CEO two years ago. "This is private information about Mr. Wyss and not Synthes-related," wrote the company's Switzerland-based investor-relations head, Gilgian Eisner, in reply to my e-mail. "He definitely is a U.S. resident, and also Swiss, but I would not know whether he is [a] resident of West Chester."
In an investor conference call last month, Wyss said he'd just flown to Switzerland from the United States and planned to stay a few weeks because "the snow conditions are fantastic." (Plus he laid out plans for a new Swiss plant, though he also complained that "it's getting more and more difficult to do cadaver work" there, due to strict policies in that country.)
Wyss was worth $6 billion last year, too. Since then, he's jumped 81 places on Forbes' list (to No. 83), due not to the growth of his fortune but to the fact that Synthes' shares bucked the market and actually rose last year.
And that - his company's strong stock performance in a collapsing market - made Wyss unusual among people who rose on Forbes' list.
Falling less
More often, moguls who rose in the rankings owned private assets, the kind that - unlike stocks or bonds - are off-limits to all but the richest Americans and the most powerful institutions.
Take, for instance, movie-theater heir and Philadelphia Eagles owner Jeffrey Lurie. Forbes measured his wealth from the value of a private asset (the team), whose value can only be guesstimated (at nearly $1 billion) until he sells it.
Forbes figured the Eagles didn't lose much value last year. Hey, they did better than expected in the playoffs. And Philadelphia taxpayers are pledged to keep paying the Eagles' stadium debt for years to come, removing that potential source of financial anxiety.
Public or private?
Are the Eagles and other illiquid assets really worth more than, say,
DuPont Co.
, compared with where they were in 2007?
More important: Did private companies and other "alternative assets" for the rich do better, as the Forbes list implies, or worse than publicly traded stocks - those more democratic investments - last year?
As noted in this space before, Pennsylvania's state pension system dragged down its overall return with expensive stock-index swaps tied to its alternative-assets portfolio. On the other hand, New Jersey Division of Investments chairman Orin Kramer says his state improved its investment performance by moving money out of stocks and into hedge funds, which lost only, roughly, half as much as stocks.
John Griswold, executive director of the Commonfund Institute, which tracks endowments at big universities, said he didn't see investors rushing to get out of alternative investments, despite losses.
To the contrary, he said, after leaving a Florida investors' conference last week: The big money believes "this is clearly going to be one of the best buying opportunities in our careers."