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CEOs, famous investors hit hard

business Updated: Nov 04, 2008 22:44 IST
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Here's something that might provide a bit of solace amid the plunging values in your retirement accounts: Warren Buffett is losing lots of money, too. So are Kirk Kerkorian, Carl Icahn and Sumner Redstone.

They are still plenty rich, but their losses — some on paper and others actually realised — illustrate how few have been spared in today's punishing market. “It's always hard to beat the market no matter who you are," said Robert Hansen, senior associate dean at Dartmouth's Tuck School of Business. "But when the ocean waters get that rough, it is hard for any boat to avoid getting swamped."

It has been a painful year for anyone exposed to the stock market. The Standard & Poor's 500 stock index, considered a barometer for the broad market, has lost about 36 per cent since January, with each sector taking a hit of 20 per cent or more.

As stocks have plunged, so have the value of chief executives' equity stakes in their own companies. The average year-to-date decline is 49 per cent for the corporate stock holdings of CEOs at 175 large US companies, according to new research by compensation consulting firm Steven Hall & Partners.

Topping that list is Buffett, who has seen the value of equity in his company, Berkshire Hathaway, fall by about $13.6 billion, or 22 per cent, so far this year, to leave his holdings valued at $48.1 billion. Oracle founder and CEO Larry Ellison has seen his equity stake fall by $6.2 billion, or about 24 per cent, to $20.1 billion.

Rounding out the top five in that study were Microsoft's Steve Ballmer, whose company equity fell by $5.1 billion to $9.4 billion;'s Jeff Bezos, whose equity fell by $3.6 billion to $5.7 billion; and News Corp's Rupert Murdoch, with a $4 billion contraction to $3 billion.

News Corp. and Microsoft declined comment, while representatives from Berkshire Hathaway, Oracle and didn't respond to requests for comment.

Certainly some of the biggest investors aren't happy.

Earlier this year, billionaire Kerkorian's Tracinda Corp. paid about $1 billion for about 141 million shares in Ford Motor — a 6.49 per cent stake.

Those shares have tumbled, and Tracinda has sold some of its Ford stock — one batch of 7.3 million shares sold at an average price of $2.43 each, and the other for 26.4 million shares at an average sale price of $2.01 each. That means for about a quarter of his total Ford holdings, he got $71 million. Tracinda spokeswoman Winnie Lerner declined to comment.

Activist investor Icahn’s holding in Yahoo Inc. has similarly plunged.

As Tuck's Hansen notes, the current market conditions are serving up a reality check — for everybody.

"Fishing isn't called catching, and investing isn't just called making money," Hansen said. "We have to remember that things can go down by a lot."