Our 18th annual special report on the wealthiest in Orange County again has the same man at the top – Donald Bren – but it also showcases new members, a higher starting point and surprising stories.
We raised the bar from $250 million to $500 million, because well, “there’s been such a giant increase in wealth—so many $100 million-plus people now it’s crazy,” said Russ Fluter, owner of Fluter Properties and a real estate investor here for more than 30 years.
There are 43 members (as always we count Victor and Janie Tsao as one entrant, partners in all of their businesses). Each of the $500M Club is profiled and we estimate they grew their totaled $83 billion, up nearly 5% over the last twelve months. As of last year, the growth in their balance sheets was mitigated for the best of reasons: OC’s wealthy are giving away sizeable portions of their fortunes.
Seven of this year’s entries moved into the neighborhood, a healthy 19% increase.
The roster didn’t lose anyone. After all, we’re on the cusp of the longest economic expansion in U.S. history. We lost one last year when Newport Coast resident and billionaire industrialist Toshiaki Ogasawara died.
The wealthy here have had bumper years, sometimes from quasi-Black Swan events, like Avago’s buy of Broadcom in 2016 at a terrific premium, combined with a continued run-up in the stock price, made outsized gains for the chipmaker’s co-founders, Henry Samueli and Henry Nicholas.
And in 2017-2018, if your businesses or holdings were largely in local commercial real estate or the worldwide equity markets, our calculations and reporting typically came up with double-digit gains.
But at 5%, the collective increase is well below the stock market—14% on the S&P 500 in the trailing 12 months. Again, the primary factor is philanthropy. Take our estimate on fifth-wealthiest Henry and Susan Samueli, a 5% reduction, $200 million. That’s the total of the couple’s record-setting donation to the University of California-Irvine’s College of Health Sciences by itself. The Samueli Foundation had many other beneficiaries over the year, mostly local.
That 10 real estate-related businesspeople would top and be the best-represented on our list isn’t surprising but contrasts with the most popular source of wealth elsewhere. Take the Forbes 400; the top seven are majority owners or hold significant stakes in publicly-traded technology companies (plus Warren Buffet, who made his fortune investing in public companies, and owns some tech).
“To some extent, it’s still and always will be real estate here, said Carol Wentz, Merrill Lynch market executive for Orange County. “But we’ve seen an emergence of wealth created from other places, technology, healthcare …”
Bob Cluck has been advising OC’s wealthy for 30 years. “Back in (the early days) here, you had healthcare, biotech, and then you had all the real estate people,” said the chairman and founder of Newport Beach-based Canterbury Consulting Inc., an $18.5 billion family office. “In fact, real estate wealth here is probably understated.”
Among our 43 entrants, which include a couple of families—Segerstrom and Moshayedi, plus the power couple of Victor and Janie Tsao—nine distinct primary sources of wealth are represented, one of several examples of the increasing diversity of OC’s wealthiest. Here are some other highlights:
• Chairman Bren made it 18-for-18 at No. 1. The biggest real estate owner and developer in Orange County is also increasingly diversified, including geographically, and still making deals. His estimated net worth of $17.2 billion is almost four times No. 2. He’s the wealthiest real estate developer in the country, per the Forbes 400, which also lists Bren as the wealthiest Southern Californian.
• LoanDepot founder and Chief Executive Anthony Hsieh not only debuted on the list at No. 14, but our $2 billion estimate for the fintech entrepreneur represents one of the biggest increases on the list, 25%.
• Vinny Smith’s bank account grew the most over the past 12 months, per our estimate, up 33% to $2 billion. His deployment of proceeds from the 2012 sale of Quest Software in startup and growth-stage companies like SecureAuth and Alteryx, two home runs for his evergreen venture capital firm Toba Capital, and he’s also giving through his Teach a Man to Fish Foundation.
• Palmer Luckey joins the list, he and his consigliere Peter Thiel fled Silicon Valley, and with defense contractor Anduril Industries Inc. Luckey will try to build his virtual wall and another game-changing tech company in Orange County.
• There’s a relatively small amount of stock-market wealth on the list. Some days, that’s a good thing, ask Mark Zuckerberg.
Trending
At a recent forum on the future of Orange County, Doug Holte, president of office properties at Irvine Co., offered this observation: “We’re still in our adolescent phase. We’ve only moved out of middle school.”
And that sense shows up in places such as the breadth of our wealth—not as wide as you might think. Of the 35 largest counties in the U.S. by population, we rank 31st in individuals making more than $75,000, according to the U.S. census. Over $200,000? 23rd of 24 at 12.3%.
That reality also shows up on a list of accumulated wealth over $500 million. Just check the roster at our affiliate publication, the Los Angeles Business Journal, where the cutoff this year was $1 billion but included about 10 more names—drawing on a population more than three times as large and with a multigenerational head start on Orange County.
“This is more of an emerging wealthy economy,” said Merrill Lynch’s Wentz, who started her 25-year run at the firm in Dallas, and has worked in a number of upscale markets. “Other areas much more mature in their wealth. I think we’re catching up at a quicker pace. It’s exciting.”
“(The rich) now, they’re all over the place here,” Cluck said. “You have this influx of technology and intellectual property (smarts) into Orange County in the tech area. Just look at all the wealth that was created out of PIMCO.”
PAAMCO co-founder Jane Buchan said she believes the wealthy here will increasingly be boosted by transplants.
“Wealthy people want to be here,” said the Oregon “transplant,” who started her hedge fund/investment company in Irvine in 2000. She transitions to an advisory role this week a year after combining PAAMCO with Prisma, and plans to start a quantitative investment fund next year.
“What has been wonderful about being in the county, and you see it in the number of people who have returned here—they see a lot more diversity, a lot more going on culturally, intellectually. Wealthy people want to relocate here.”
The Process
Our list criteria are that individuals either made their fortunes here or call Orange County home.
In compiling it and producing this issue, our reporters spent weeks, and truly parts of every week of the year, reviewing company assets, examining public records, and talking with experts and trusted sources to make our best-faith estimates of net worths.
We are conservative every year. We look for benchmarks with private companies; factor in balance-sheet items, such as debt; and wealth transfers, like the aforementioned charitable giving.
Not every document is accessible, and neither is every individual.
And so we know our list of OC’s wealthiest people is incomplete, but we send our sincere appreciation to all of those who helped us compile our 18th OC Business Journal OC’s Wealthiest.
