TRUMP FORTUNE SET FOR MEME-STOCK BOOST
▶ In our fortnightly round-up, Musk’s net worth jumps after Hertz deal while Stroll plans to scale up his F1 racing team
Former US president Donald Trump’s sagging fortune is poised to receive a big boost from meme-stock mania.
News that his nascent media enterprise, Trump Media & Technology Group, is planning to go public via a special purpose acquisition company has sent retail investors into a frenzy, even though few details have been released.
The stock gain drove the implied value of the new venture to more than $8.2 billion.
Based on figures from press releases and filings to the Securities and Exchange Commission, it appears Mr Trump will own more than half of the combined company.
At its current value, that would make him the richest he has ever been, up from his estimated net worth now of $2.5bn, according to the Bloomberg Billionaires Index.
In the rollercoaster world of Reddit-fuelled trading and grandiose Spac hype, those gains are hardly firm. But the money betting on a Trump media conglomerate marks a sharp turnaround for a post-presidency that has not been kind to the billionaire’s business empire.
His Washington hotel, which was first put up for sale in 2019, is still on the market while the midtown Manhattan tower that bears his name has growing vacancies. This summer, the chief financial officer of the Trump Organisation was charged with tax fraud.
Mr Trump’s net worth has declined by about $500m since he entered the White House, with the Covid-19 pandemic and fallout from January’s Capitol riot delivering additional blows to his business interests.
Most of his wealth is tied to the Trump Organisation, a sprawling property business that has been hurt by the pandemic and legal troubles. There is also at least $590 million in debt coming due in the next four years that is linked to the company’s properties, more than half of which is personally guaranteed by Mr Trump.
In April, the company scored a win when its partner in two tower blocks, Vornado Realty Trust, refinanced debt tied to its San Francisco tower, bringing $617m to its owners.
The Trump Organisation also appears to be closing in on a sale of Washington’s Trump International Hotel, which was a hotspot for political allies, lobbyists and conservative media figures during his administration.
“We are one of the most under-leveraged real estate companies in the country, relative to our assets,” Mr Trump’s son Eric said at the time of the Vornado deal.
Elon Musk
Elon Musk’s personal fortune jumped by $36.2bn after Hertz placed an order for 100,000 Teslas and filings showed a new tranche of options in his moonshot pay package.
It was the biggest one-day gain in the history of the Bloomberg Billionaires Index, eclipsing Chinese tycoon Zhong Shanshan’s $32bn surge last year when his bottled-water company, Nongfu Spring, went public. Mr Musk’s net worth of $311bn is now greater than the market value of Exxon Mobil or Nike.
Tesla shares rose by 13 per cent on news of the Hertz order on October 25, pushing its market value past $1 trillion. About two thirds of Mr Musk’s net worth is tied directly to shares and options in the electric car maker, of which he is co-founder and chief executive.
Mr Musk is increasingly pulling away from his fellow mega-billionaires when it comes to the size of his fortune. Amazon’s Jeff Bezos is ranked second with $195bn, according to the Bloomberg index.
Mr Musk’s extraordinary jump in wealth comes as Democratic lawmakers, with US President Joe Biden’s support, draw up a plan to tax the unrealised gains of the very richest Americans. Senate Finance Committee chairman Ron Wyden, an Oregon Democrat, is laying out the billionaires’ income tax, which would be aimed at those with $1bn in assets, or three consecutive years of $100m or more in income.
The stock-based nature of Mr Musk’s fortune has made it possible for him to gain billions of dollars in paper wealth and become the world’s richest person while having few liquid assets. He accepts no salary from Tesla and part of his stake is pledged as collateral for personal loans, according to company filings.
He told a federal jury in 2019 that despite his multibillionaire status, he did not have much cash. Last year, he announced that he planned to sell his homes and “almost all” his physical possessions.
Tesla shares have climbed in recent weeks, even before the Hertz deal. The car maker’s stock price is up 45 per cent this year, more than double the gain of the S&P 500 Index, as investors continue to reward green technology.
A surge in Tesla stock is not the only source of wealth gains for Mr Musk. The seventh tranche of his massive 2018 stock option package was vested in the third quarter, according to a regulatory filing on October 25, adding about $8bn to his net worth.
John Catsimatidis
Supermarket magnate John Catsimatidis is taking a page from the playbook of many of his fellow New Yorkers: he is setting up a perch in Florida.
The billionaire investor, whose development projects have been limited to rentals in New York City’s outer districts, is trying his luck as an apartment developer in St Petersburg, in the Tampa Bay region.
His company, the Red Apple Group, broke ground this week on a 157-metre tower and has financial commitments from buyers for 20 per cent of the 301 units, he says. He bought the uppermost penthouse himself, for $7m.
The project, called the Residences at 400 Central, “appeals to people who just want to move, and want to pay less taxes”, Mr Catsimatidis says.
He is among developers setting sights on Florida as the state continues to lure rich north-easterners seeking better weather and more favourable tax laws.
Finance, banking and technology companies are setting up satellite offices in the Sunshine State, bringing with them a new source of demand for luxury property. This month, Ark Investment Management, a company run by Cathie Wood, announced that it would close its New York office permanently and move its corporate headquarters to St Petersburg.
Mr Catsimatidis – whose New York bona fides include a 2013 run for mayor, a local radio talk show and cable advertisements in which he promotes his oceanfront Coney Island apartments in an unmistakable accent – is also opening an office in St Petersburg because he plans future projects there.
“We will probably allocate another $1bn over the next three years,” he says.
His current $400 million project, taking up a full city block in St Petersburg’s city centre, will be the tallest residential tower on Florida’s Gulf Coast, Mr Catsimatidis says.
Prices at the property, with such New York-typical amenities as a bocce court, fire pit and putting green, start at $800,000 for a one-bedroom apartment. Construction will be complete in 2024.
Lawrence Stroll
After initiating the reboot of supercar maker Aston Martin Lagonda Global Holdings, billionaire Lawrence Stroll has similar ambitions to scale up his Formula One racing team.
Mr Stroll bought the team, now called Aston Martin Cognizant Formula One, out of administration for £90m ($124m) in 2018. He is building a new wind tunnel and a factory at Silverstone, allowing 100 per cent of the racing car to be built in-house, he says.
The Canadian billionaire took over as executive chairman of Aston Martin Lagonda in 2020 after leading a rescue of the beleaguered car maker. His consortium is currently the largest shareholder. As part of the rescue, Mr Stroll’s F1 team was rebranded with the car maker’s name but is otherwise independent of it.
The wind tunnel will help the team to create more aerodynamic cars, as well as provide a revenue stream when it is not in use. The team is considering whether to build its own racing engine for the 2026 season, Mr Stroll says. It currently sources engines from Mercedes-Benz.
“The advantage the factory will give us will be tremendous,” says Mr Stroll. “We are making this investment to make the cars go faster. Having the newest, latest and greatest wind tunnel will be a major breakthrough.”
Mr Stroll’s team will finance its construction plans with a £250m bond sale unveiled this month that he hopes will attract individual and institutional investors.
He plans to fold the F1 team into a larger entity called Aston Martin Performance Technologies, led by former McLaren veteran Martin Whitmarsh, which will offer consulting and services to other companies, as well as to Aston Martin Lagonda, Mr Stroll says.
The racing team began in 1991 and has had a series of owners. Mr Stroll plans to increase staffing for the team to 1,000 people, from 600 currently.