A SAUDI PRINCE has "severed ties" with Forbes magazine saying it has undervalued his wealth by $9.6 billion in its annual rich list. As result, he is rated only the world's 26th richest man when in his view he should be 10th. Prince Alwaleed bin Talal, whose investment interests include Twitter, News Corp and London's Savoy Hotel, disputed the list after Forbes put his net wealth at $20 billion. Alwaleed estimates it is $29.6 billion. See The Business for The Week’s daily news round-up, He blasted the publication's "flawed" valuation methods, saying they "seemed designed to disadvantage Middle Eastern investors and institutions", the Financial Times notes.A statement from the tycoon's Kingdom Holding Company said he would longer cooperate with Forbes but would continue to work with those compiling the rival rich list - the Bloomberg Billionaires index, which ranks him as the world's 16th richest man. Alwaleed's placement isn't the only eyebrow-raiser on this year's Forbes list. Warren Buffett, the so-called 'Sage of Omaha', has dropped out of the top three for the first time in 13 years. The billionaire American investor, estimated to be worth $55.5 billion by Forbes, has been overtaken by Zara fashion chain founder Amancio Ortega, the richest man in Europe. Mexican business magnate Carlos Slim topped the list for the fourth time in a row with an estimated worth of $73 billion, followed by Bill Gates with $67 billion. The average age of the ten richest individuals was 74. According to Forbes, the dollar billionaires club welcomed 210 new members in the past year, taking the number up to a record 1,426. The top ten: 1. Carlos Slim $73bn, 2. Bill Gates, $67bn, 3. Amancio Ortega, $57bn, 4. Warren Buffett, $55.5bn, 5. Larry Ellison, $43bn, 6. Charles Koch, $34bn and David Koch, $34bn (joint entry), 8. Li Ka-shing, $31bn, 9. Liliane Bettencourt and family, $30bn, 10. Bernard Arnault and family, $29bn.Source: The Week UK
Prince Alwaleed bin Talal challenges Forbes rich list
World’s rich getting richer
According to the Bloomberg business news agency, the combined assets of the world’s 100 richest people grew by $241bln in 2012 to almost $1.9trln.
The fastest fattening were the tycoons of the telecommunications and the retail industries. The top position in the rich list was retained by the 72-year-old Mexican telecommunications mogul Carlos Slim. Position Two was retained by Bill Gates. Spain’s Amancio Ortega, 76, the owner of the Zara clothing chain, replaced America’s Warren Buffett as the world’s third richest person. Ortega also was first in terms of capital accumulation in 2012. TASS, Source: Voice of Russia
Warren Buffett lays down logic against dividends
In his latest annual letter to shareholders, Buffett explains why paying dividends doesn't make sense. The annual letter that Warren Buffett writes to his shareholders is something of an event in the business world. What is normally mundane business communication from other CEOs, has become an art form in Buffett's case. This year's letter has excited media people more than most because it has a long discussion about the media business. Over the last few years, Buffett has bought a string of newspapers even though the newspaper is widely understood to be in severe decline in the US. However, the most interesting part of the letter is Buffett's response to the constant clamour for dividends that he hears, given his holding company Berkshire Hathway's $50 billion cash chest. He lays down four uses to which a company can put its cash, in decreasing priority. First, it should reinvest the money in growing its core business. If that cannot be done productively, then it should use the cash to acquire or expand into other businesses. If that too is not feasible, then it should repurchase its own shares if they are available cheaply enough. He lays down 120% of book value as the standard for cheap enough that Berkshire follows. He terms share buybacks at this level as 'buying a dollar for 80 cents'. Only if this too is not possible should a company consider paying dividends. It's an interesting view, and one which is hard to fault. The logic of prioritising share buybacks over dividends is sound, even though it won't sound so to Indian ears. But what about investors who want a cash income from shares? Buffett's recipe is interesting - sell some stock to realise the amount you want. He says that this always leads to a better outcome for the business and the shareholder, including in tax-efficiency. The letter is a great read, but don't take my word for it - download it and read it for yourself. Source: Hindustan Times
