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Thursday, Jun 13, 2024

OC’s Wealthiest Avoid ‘Richcession’

It’s been a banner period of fundraising for the University of California, Irvine.

After topping $200 million in giving to the school in 2022, UCI has already announced several high-profile donations in 2023, including a June gift of $50 million from Broadcom Inc. Chairman Henry Samueli and his wife, Susan.

It’s been an even better period for the Samueli family, based on the stock returns seen at Broadcom (Nasdaq: AVGO), where Henry Samueli is the semiconductor giant’s largest individual shareholder with a 2.1% stake in the firm, according to regulatory filings.

Broadcom’s stock is up about 85% year-over-year, for a market cap of nearly $375 billion as of last week.

It’s closing in on becoming one of the 10 most valuable tech companies in the world by valuation.

Since Singapore’s Avago Technologies bought then Irvine-based Broadcom for $37 billion in cash and stock at the start of 2016—the acquiring company kept the Broadcom name, and later moved its headquarters to San Jose—its stock has risen over sixfold.

The growth is thanks to insatiable global demand for its wireless chip products, as well as an aggressive acquisition streak; it’s now nearing completion of virtualization software giant VMware, a $61 billion buy.

Samueli now counts a stake in Broadcom worth over $7.8 billion. Factoring in his other assets like the Anaheim Ducks, local real estate investments around Honda Center and prior sales of company stock, the Business Journal conservatively estimates the family’s fortune at $11 billion, up nearly $4 billion from a year ago.

It’s the largest increase seen for an entry on the latest Business Journal listing of OC’s Wealthiest, the centerpiece of this week’s edition.

The latest gift from the Samueli family to UCI will be used for engineering-focused research (see story, page 42); the gift puts the couple’s reported giving to UCI past $300 million.

S&P Rebound

The Samueli family’s boost is outsized, but largely in keeping with trends seen in the OC’s Wealthiest edition this year; the 39 entries included in the paper count a combined wealth of $157.5 billion.

That’s up 10% from last year’s edition, and a figure that approaches the GDP of Algeria, the world’s 57th-largest economy.

The gains run counter to the current description of the national economy as not being in a technical recession, but rather a so-called “richcession,” an economic slump that disproportionally affects the top 25% of U.S. wage earners due to a combination of tech job cuts and the fallout from interest rate hikes, among other factors.

Thank a rebounding stock market for a portion of the increases seen across the entries on the Wealthiest list.

The benchmark S&P 500 is up about 18% from a year ago, with most of the gains taking place in 2023.

“The last six months have been a barnstormer,” said Igor Olenicoff, owner of Newport Beach’s real estate firm Olen Properties, who sources tell the Business Journal also has a considerable stock portfolio, alongside Olen’s sizeable collection of apartments and low-rise offices.

The estimates for several entries on the list are tied to the stocks of companies they founded or have large stakes in; in the case of Corona’s Monster Beverage Corp.

(Nasdaq: MNST) and Broadcom, their stock performance over the past year has significantly outperformed the S&P 500.

Real Estate Flux

The Business Journal increased the estimates for 26 entries on the latest list.

Each entry counts wealth estimated at a minimum of $1.25 billion, the same threshold we used for inclusion last year.

There’s 11 “Weekend Wealthy” entries on the latest wealth ranking, due to those execs being reported to have a second home or homes in the area.

The largest drag on many list members’ wealth this year is commercial real estate.

Valuations for high-rise offices, in particular, are largely down across the country, based on the stock performance of national REITs that focus on higher-end buildings.

Irvine Co.’s recent performance appears to outperforming the market, based on leasing success (see story, page 38), but the Business Journal still opted to slightly reduce the valuation for Chairman Donald Bren from last year’s estimate of $18.2 billion, which was our highest-ever estimate for him.

This year’s valuation of $18 billion for Bren still gives the country’s wealthiest real estate owner the No. 1 spot on this edition, by a considerable margin.

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