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Billionaire-owned stocks to avoid

world Updated: Mar 16, 2010 23:23 IST
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When last year's list of the World's Billionaires hit the stands in March 2009, markets across the globe were diving toward bear-market lows that would wipe out more than a decade of gains.

Investors fled stocks, stashing cash in safe havens like government-guaranteed certificates of deposit, Treasury bills and FDIC-insured bank accounts. Settling for sickly yields, it was thought, was far better than watching your life's savings vaporized by a relentlessly dropping market.

Related stories:

Billionaire Playgrounds 2010
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Self-Assessment: Are You Born To Be A Billionaire?

In Pictures: Biggest Billionaire Gainers
In Pictures: Billionaires' Bad Bets

Thinking changes on a dime in the stock market, and sure enough over the past year the riskiest securities--like junk bonds and auto parts makers' stocks--have been among the hottest investments. Another bet that's done particularly well: a basket of billionaire-controlled stocks.

Some cases in point: Over the last 12 months, Steve Jobs' Apple yielded a 102% return; Ralph Lauren's Polo Ralph Lauren surged 111%; Rupert Murdoch's News Corp. rallied 101%; and Anil Ambani's Reliance Infrastructure delivered an 87% return. An investment in Chinese newcomer Li Shufu's Geely Automotive would have more than quadrupled your money.

Tempted to jump in? Do so only selectively. The bargains that existed on paper a year ago--but which most investors were too scared to capitalize on--have mostly vanished. Multiples of earnings and book values are no longer far below historic norms. Here are some billionaire-controlled stocks that have done especially well the past year but seem less like bargains these days.

These five hot stocks are at risk of cooling down.*

Las Vegas Sands
Gain in past 12 months: 1,227%
P/E: NA
Billionaire owner: Sheldon Adelson
Reason to avoid: High unemployment and new Las Vegas competition from City Center could hurt performance. Other risks: Singapore, Macau casino projects.

Mannkind
Gain: 355%
P/E: NA
Billionaire owner: Alfred Mann
Reason to avoid: Fate rests solely on inhalable insulin product; diabetes drugs face tough regulatory hurdles. Similar product from Pfizer flopped. Large short position in shares.

Garmin
Gain: 111%
P/E: 10.5
Billionaire owners: Min Kao and Gary Burrell
Reason to avoid: GPS maker faces tough competition as navigation systems become ubiquitous on smart phones. Firm also in price war with TomTom.

Marriott International
Gain: 119%
P/E: 30
Billionaire owners: John Marriott and Richard Marriott
Reason to avoid: Weakness in business travel continues; recovery of hotel and travel industry may lag market. Time-share business suffering from high unemployment, weak economy.

North American Palladium
Gain: 241%
P/E: N/A
Billionaire owner: George Kaiser
Reason to avoid: Palladium prices tied to volatile auto industry. Resources at main Canadian mine reportedly stretched thin; growth dependent on expensive and risky exploration process.

*Stock changes are between March 9, 2009, and March 9, 2010. For a similar story that ran in the March 29, 2010, Billionaires issue of Forbes magazine, returns were calculated between Feb. 13, 2009, and Feb. 12, 2010, the same dates on which billionaires' assets were priced.