Warren Buffett – chair and CEO of Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) – has been amongst the world’s richest people for decades now. Buffett built his gargantuan conglomerate Berkshire Hathaway from a failing textile mill in the 1960s into one of the largest companies in the world today. It’s estimated by our Fool colleagues over in the US that Berkshire shares were around US$12.37 when Buffett took over the company in 1966. Today, those shares will set you back a staggering US$276,015 each. That’s a rough annual compounded growth rate of 20.9% and the main reason why Buffett is today the world’s 8th richest person and an investing idol for many.
Buffett’s average year
But 2020 has been a punishing year for Buffett and it’s starting to show. According to reporting in the Australian Financial Review (AFR), which in turn quotes Bloomberg’s Billionaires Index, Buffett was briefly overtaken by Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk last week in terms of total net worth.
Although the 2 gentlemen are neck and neck at the time of writing (with Buffett’s net worth at US$69.7 billion and Musk at US$68.6 billion), it still represents a monumental ‘changing of the guard’ moment, in my view. Musk has now added an extraordinary US$41 billion to his fortune since the start of the year, whereas Buffett has lost US$19.5 billion.
Buffett still owns a massive stake in Berkshire Hathaway, but the company has struggled amid the coronavirus pandemic and March market crash. Even though the shares still command a hefty price tag today, they are still down around 20% from the highs of over US$347,000 back in February.
According to the AFR, Buffett also admirably donated roughly US$2.9 billion to charity last week, which obviously pulled down his net worth as well. The AFR also reports that since 2006, Buffett has given away around US$37 billion worth of Berkshire shares.
Enter Elon
Musk is a founding investor of Tesla, an electric vehicle and infrastructure manufacturer whose share price has ballooned from US$430 a share at the start of the year to US$1,497 at the time of writing. Since Musk owns around 38.7 million Tesla shares (around 20% of Tesla’s outstanding share volume), this is where the majority of his wealth is now stored. As a result of this, Musk is now the highest-paid CEO in the USA, having received a healthy US$595 million bonus as a result of Tesla’s exploding market capitalisation earlier this year.
But Tesla isn’t musk’s only gig. He is also CEO of space exploration company SpaceX, as well as CEO of The Boring Company and Neuralink (all private companies). Talk about a full workload!
Foolish takeaway
Despite what you think of Mr. Musk or Mr. Buffett, it is still interesting seeing the net worth of these titans of capitalism fluctuate. It is worth noting that Buffett would still trump Musk if it wasn’t for his generous philanthropy over the past 2 decades.
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Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and Tesla and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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