The rich start their comeback

If you are a typical investor, it’s unlikely that you bothered to celebrate the end of the 2008-09 financial year. Let’s face it – it was a shocker.

The credit crunch paralysed global markets and almost led to the collapse of the financial systems. Corporate giants crashed into receivership. The commercial property market has been hammered. And the S&P/ASX 200 crashed 24.2%, spilling red ink over everyone’s portfolios.

But take heart. Nobody, not even Australia’s 20 richest sharemarket investors – a list that includes James Packer, Frank Lowy, Gerry Harvey and Andrew Forrest – managed to escape the carnage.

Analysis of the performance of their stakes reveals their total wealth fell a staggering 44% over the course of 2008-09 from $30.1 billion to $16.7 billion.

Three big losers stand out. Andrew Forrest’s fortune fell from $12 billion to $3.8 billion over the period as shares in his iron ore miner Fortescue Metals were hit by the savage slump in commodity prices.

The king of Australia’s waste management sector, Terry Peabody, saw the value of his stake plunge 66.7% from just over $600 million to just over $200 million, as Transpacific desperately tried to find a way out from under its mountainous debt.

John B Fairfax, patriarch of the Fairfax family and director of Fairfax Media, also took a hammering as the company’s advertising revenues dried up. The value of his stake dropped 59.7% from $634 million to $255 million over the year.

But there were a few bright spots. Shares in Kerr Neilson’s funds management business Platinum Asset Management rose 32.5% across the year, boosting the value of his stake from $1 billion to $1.3 billion.

Despite Harvey Norman’s problems with falling consumer spending, Gerry Harvey actually managed a reasonable year, with the value of his stake increasing 25.5% from $819 million to just over $1 billion. Welcome back to the billionaire’s club, Gerry.

The biggest winner in terms of percentage gains was Peter Bond, chief executive of miner Linc Energy. The company’s shares jumped more than 665%, from 20c to $1.53 over the course of 2008-09, taking Bond’s fortune from $40 million to $307 million.

But while 2008-09 was ugly, it should be noted that the fortunes of the rich are recovering much faster than the average investor.

Since December 30, 2008, the S&P/ASX 200 has increased just over 6%, while the fortunes of the 20 richest investors has climbed more than 17%.

James Packer has done particularly well, with the value of his sharemarket investments (including stakes in Crown, Consolidated Media, Sunland Development Group, Challenger, Energy World Corporation, Wild Horse Energy and Magellan Flagship Fund) rising 23.5% from $2.3 billon to $2.8 billion.

Andrew Forrest is also roaring back up the rich ladder in a big way. His stake in Fortescue has jumped from $1.9 billion to $3.8 billion since the start of the year.

Over in the United States, solar power entrepreneur Shi Zhengrong is also rebuilding his shattered fortune. While the value of his stake in the company has risen from $US718 million at the start of the year to just over $US1 billion, although it’s worth noting that it’s down from $US2.3 billion a year ago.