RICH PICKINGS: Bargain hunting billionaires
With volatility the norm throughout the world's economies, prudent investors are playing it safe. But for the super rich, that instability means the market is full of bargains.
But not everyone.
Despite the sense of caution – or indeed perhaps because of it – the rich are still looking for opportunities.
Most have cash to spend and many consider themselves counter-cyclical – their experience tells them that they best time to buy is often when no one else wants to.
From Gerry Harvey and James Packer through to Harry Triguboff and Clive Palmer, the rich are showing that you can’t keep good bargain hunters down.
Let’s examine 10 rich listers who have dipped their toe into the market.
Structural change is ripping through retail and spitting out many buying opportunities for bargain hunters and Gerry Harvey has been willing to dip his toe in the water. But his strike rate has been variable. Harvey Norman’s purchase of the collapsed chain Clive Peeters was a disaster, and the company is being much more careful in buying some Retravision stores. But Harvey’s heart is still in retail and last week he emerged as the sub-underwriter of a $4.4 million rights issue by toy company Funtastic, that will see him take a 3-4 per cent stake. The company, which already counts Lachlan Murdoch as a shareholder, says Harvey was keen to get as much stock as he could.
Property developer Harry Stamoulis is worth $455 million according to BRW's Rich 200 list and he clearly has a bit of cash to splash. Last week he was revealed as the buying of an industrial site sold by soap marker Symex. The Port Melbourne site is part of an "island” in the suburb that has been earmarked for redevelopment by the Victorian Government, so Stamoulis will be hoping for a good return on his $25 million investment.
After seemingly abandoning his days as an angel investor James Packer has roared back into the game with a number of purchases, including stakes in Deals Direct and Catch of the Day. But in April, Packer also placed a decidedly counter-cyclical bet by snapping up a 6.1 per cent stake in Treasury Wines, the wine group spun off from Foster’s, for about $175 million. The wine industry clearly has its struggles, but Packer is betting on a turnaround. Perhaps if the likes of Treasury can crack the Chinese market, Packer will emerge as a big winner.
Perth’s Roberts family can thanks property development for the $1.7 billion fortune, but five years after the family sold its company Multiplex it has dipped its toe into the water of online retailing. The family’s investment vehicle RF Capital, has launched a business called eFINITY and acquired three small online retailers: mycatwalk (which also has four bricks and mortar stores), threadpeople and babysgotstyle. The sites plan to double each year for the next three years, and eFINITY is also on the lookout for more acquisitions. It’s a crowded market, but one where big returns can be made relatively quickly.
Sydney entrepreneur Anthony Karam made a brief stay on BRW’s Young Rich list, exiting in 2010 with a $42 million fortune. He’s yet to surface on the main rich list, but that might be a matter of time – he ticketing and labelling group TMA has lobbed a cheeky (and some would say cheap) bid for printing group PMP. There has been speculation Karam has an offshore backer for the bid, which was priced at 68-75c a share, a healthy premium to the 34c the company is currently trading at. But in early July PMP blocked TMA from performing due diligence on this basis its funding was not in place
Clive Palmer is famous for talking a big game, but he has also been doing more than a spot of bargain hunting since the start of the year. His most high-profile purchase was the former Club Med resort at Bora Bora in Tahiti, French Polynesia, which set him back about $10 million. Palmer said he bought the resort "relaxation, serenity and because no one else was going to buy it”. But Palmer has also been buying closer to home. Since the start of the year Palmer has bought five properties around the Gold Coast suburb of Paradise Point outlaying a total of $5.95 million for what Property Observer has described as a series of bargains. Palmer has not elaborated on his motivation for the residential property investments, although they would appear to be a long-term bet on the depressed Gold Coast market.
Property billionaire Lang Walker seems to be constantly trading – this year’s be bought, sold and even swapped property assets. One of his recent buys was 56.7 hectares of land near Maitland in NSW. It’s a site where is planning a $200 million, 400 house development. The site, at Gillieston Heights cost Walker $11 million. It has development approval for house and land packages. Walker has also bought land in inner Brisbane, where he plans a $100 million apartment project.
Sydney apartment king Harry Triguboff is a well-known bargain hunter and has picked up a number of development sites in the last few years from sellers desperate to offload. His latest buy came in July when he paid $48.5 million for the Lewisham Estates site in Lewisham. While the site is potentially a great buy – it has approval for up to 430 units and great proximity to public transport – it has been controversial, with residents protesting the proposed tower development. Harry might have some fun securing the final development approvals.
Perth-based billionaire Stan Perron has made on the biggest buys of the year, spending just under $700 million to take three half stakes in three of Centro’s biggest shopping centres: Perth’s Galleria, Adelaide’s Colonnades and Melbourne’s The Glen. It was a huge deal for the recovering Centro and a big deal for the retail sector. But it also represents a strong endorsement in the retail sector by the canny Perron, who now has 80 per cent of his extensive property portfolio in retail.
Well, we really couldn’t finish without mentioning the highest-profiled rich list investment of the year – Gina Rinehart’s purchase of a substantial stake in Fairfax. Her investment stands out from these other entrepreneurs for a very good reason – hers is not a buy motivated by money.
James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.