Far from Slim pickings as Mexican tycoon beats Gates and Buffett on stock market
Carlos Slim's Mexican holdings, ranging from mining to communications, helped him beat Bill Gates and Warren Buffett on the stock market for the second straight year, and gains in 2011 may widen his lead atop the global wealth list.
Slim's publicly disclosed holdings surged about 37pc to $70bn in 2010, with wireless carrier America Movil representing $48.9bn of that wealth, according to data compiled by Bloomberg.
The 22pc jump in Berkshire Hathaway shares wasn't enough for Buffett to catch up, and Gates's Microsoft fell, hurting his returns even as he spread his investments.
Mexico will be "the emerging market of 2011", boosting Slim's holdings, according to Walter Molano, head of research at BCP Securities in Greenwich, Connecticut. Growth will come from an economic expansion in the US, Mexico's top trading partner, and from investors looking for growth opportunities outside of Brazil, Russia, India and China, he said.
"Slim is in for a very good year," Molano said in a phone interview. "With China overheating, and clearly Brazil looking like a very crowded trade, people are starting to look at Mexico as an alternative."
Emerging markets in Latin America and Asia are in an "enviable" position for growth, with rising consumer demand and low interest rates, Slim (71) said in November. America Movil shares rose 15pc in 2010 as the number of Latin American mobile-phone owners neared 100pc of the population.
Slim's best-performing asset last year was one of his oldest, holding company Grupo Carso, which almost doubled as it prepared for this year's spinoff of its mining operations amid soaring gold and silver prices. His biggest loss came from a stake in publisher New York Times, which fell 21pc.
Slim's publicly disclosed shares in US markets represented less than $500m of his total holdings, with the rest in Mexican companies.
Stephen Graham, a Goldman Sachs Group analyst in Sao Paulo, is forecasting Mexico's IPC index will gain 9pc this year, about half the rate forecast for Brazil's stock market index, after a 20pc rally in 2010.
In a news conference this week, Slim said he would spend $3.66bn this year on Mexican telecommunications, mining and infrastructure projects. America Movil is spending $8bn a year through 2014 to prepare for growth in the demand it anticipates for data services like internet access and video.
Part of Slim's success last year came simply because his holdings are mostly in Mexico, a country where investing is riskier than in the US, said Gerald Martin, a finance professor at American University's Kogod School of Business in Washington. If the comparison between Slim and Buffett's stock performance last year were adjusted for risk, Buffett may have come out ahead, he said.
"In good times Berkshire won't go up as much, and in bad times it won't go down as much," he added.
Slim's performance last year would have beat those of Buffett and Gates even if the US billionaires hadn't sold off shares of their companies. Buffett (80) gave $1.6bn in shares to the Gates Foundation in July as part of his plan to donate 99pc of his wealth in instalments.
Thanks in part to donations from Buffett and Gates, the Gates Foundation had $15.4bn in stock-market holdings at the end of 2010, more than double the previous year's total. Its biggest gainers included Caterpillar, AutoNation and US-listed shares of Slim's America Movil.
While Slim's Telefonos de Mexico, the state-owned monopoly he acquired in 1990, was his second-worst investment in 2010, the carrier's 2001 spinoff America Movil continued to be his most important success. The company began as a Mexican carrier in the early days of the mobile-phone business and, through acquisitions, became Latin America's largest wireless company and Mexico's biggest publicly traded firm.
Slim and Gates became wealthy through similar bets in new technologies, and were helped by their dominant market positions, said Thomas Russo, who manages about $4bn at Gardner Russo & Gardner in Lancaster, Pennsylvania.
"They basically had the privilege of owning a monopoly with enormous pricing power in markets that grew," Russo said.
"The consumer-PC business fuelled Microsoft's wealth, and the rollout of telephone services Carlos has been able to control over decades."
The son of a Lebanese immigrant who ran a dry-goods store in downtown Mexico City, Slim built his fortune by buying real estate and assets such as a bottling company and a cigarette maker during periods of economic crisis in Mexico. His move to take control of Telmex in a 1990 privatisation sale helped catapult him into the ranks of the world's richest.
Forbes named him the wealthiest person in the world last year, followed by Gates and Buffett.
Slim and his family control 42pc of America Movil's shares. They hold a stake of 79pc in Grupo Carso and 55pc in Grupo Financiero Inbursa, a financial services company that has tripled its branches since the end of 2008.
America Movil gets about 65pc of its revenue from Mexico, with the rest coming from other countries in the region including Brazil, the US and Colombia.
Slim's best-performing and biggest foreign holding was Saks, the luxury retailer that gained 64pc last year.
His investment vehicle Inmobiliaria Carso holds a 16pc stake in Saks. Inmobiliaria Carso has 6.9pc of the class A shares of Slim's worst performer, New York Times, plus options to increase that stake to 16pc.
Carso's mining spinoff Minera Frisco made its debut on Mexico's stock market on January 6 and has gained 80pc since as investors snapped up a new way to gain exposure to the country's precious metal production.
"As commodities continue to perform well, people are going to start digging into the incredibly rich veins of metals sitting right below the surface in Mexico," Molano said.