The Bloomberg Billionaires Index is a list of the world’s 500 richest people. The top 10, which includes Amazon (NASDAQ:AMZN) CEO Jeff Bezos and his 59.1 million shares of AMZN stock, is an astounding $768 billion.
Up until Jeff Bezos and his wife MacKenzie Bezos announced a settlement in their divorce proceedings this past June (Mackenzie received a 4% stake in AMZN stock currently worth $36.5 billion) Jeff Bezos was comfortably in the top spot on the Bloomberg Billionaires Index with a net worth over $157 billion.
However, with the transfer of Amazon stock to Bezos’ ex-wife, the Amazon CEO’s lead has shrunk to $6 billion, an amount that can be made up in a matter of days. So, I’ve started to wonder who has the best chance of passing the man behind Amazon over say, the next 12-24 months.
Here are two of the most likely candidates.
I recently read an article in the Financial Post that discussed Bill Gates’ strategy for keeping his fortune moving higher — the sole purpose being to fund his foundation.
To date, he and his wife Melinda have made more than $35 billion in charitable donations, and yet, his net worth sits at $107 billion, $16.4 billion higher than at the end of 2018.
“We’re not, you know, in some defensive posture where we’re mostly in cash, or anything like that,” the Microsoft Corp. founder said in an interview with Bloomberg Television. “The strategy that’s been used on the investments is to be over 60% in equities.”
One of those equities making a big contribution is Microsoft (NASDAQ:MSFT), which has a total return year to date of 36.6%. Bill Gates owned 102.99 million shares of Microsoft as of Sept. 26, 2018, the date of its most recent proxy filing.
Given the focus on the cloud by CEO Satya Nadella, a move that’s revived Microsoft’s fortunes over the past five years since Nadella took the helm in 2014, the company remains a favorite of both analysts and InvestorPlace contributors.
“The big reason that many analysts are bullish on Microsoft stock is the fact that the firm’s cloud business, Azure, is becoming increasingly larger and more profitable. A few years ago, many were skeptical about Microsoft’s ability to change with the times and become a cloud competitor,” stated Laura Hoy in late August.
In hindsight, Azure’s become a major threat to Amazon and a big moneymaker in the process.
Gates’ aggressive tactics with his foundation’s wealth, combined with his 1.3% stake in Microsoft, should be enough to give Bezos a run for his money.
Except for MacKenzie Bezos, no billionaire has gained more wealth in 2019 in pure dollar terms, than Bernard Arnault, the CEO and genius behind LVMH (OTCMKTS:LVMUY), the Paris-based luxury goods conglomerate, whose brands include Louis Vuitton, Christian Dior, Dom Perignon, Ardbeg, Tag Heuer, Sephora, and DFS.
Arnault’s wealth has grown by 39% or $26.9 billion year-to-date to $95.5 billion, putting him in third place, $12.5 billion ahead of Warren Buffett.
The biggest knock against owning LVMH stock is that global economic uncertainty would hurt sales of its more than 75 brands as customers rein in their spending. That’s a valid argument. However, a counter-argument would be that a global recession would hurt those less well off far more than it would hurt buyers of $1,500 handbags.
Recently, Fortune highlighted the company’s growth plans for Louis Vuitton in China and other emerging economies where demand is so high, it’s adding 1,500 manufacturing jobs in France over the next three years to keep pace.
In the latest quarter, its fashion and leather goods segment saw a 20% increase in sales, with Chinese sales off-the-charts good.
Interestingly, LVMH’s success has not led to unsold products and waste.
“Faster production and data-crunching about demand trends have allowed the brand to cut back on inventories. That allows the company to limit the destruction of unsold goods—a widespread practice among luxury-goods brands that seek to burnish their exclusivity by keeping products out of bargain bins,” stated the September 5 article in Fortune.
Last December, LVMH acquired Belmond, a luxury hotel group for $3.2 billion including the assumption of debt. With 46 luxury properties in 24 countries, its best-known asset is probably the Orient Express train service it operates in Europe.
As Arnault and LVMH continue to deliver a luxury experience second to none, unless the world suddenly decides to forsake the good things in life, I could see it giving Amazon a run for its money.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.