Forbes came out with their ranking of billionaires today. Charles and David Koch are each worth $40 billion. I have followed the net worth of the Koch's for some time now (30 years worth of data. What is interesting though is that the compound annual growth rate of Charles and David Koch's net worth is close to 17%/year which is much better than the market.
If Koch were a publicly traded stock it would be outperforming the S&P 500! However, the standard deviation is 44% which is vastly much higher than the stock market which has a standard deviation of a large fraction of that. Koch prefers to remain private because they don't like to have to be meet quarterly numbers or care what Wall-Street analysts think and instead rely on the long-term view. Koch does invest 90% of their earnings back into the company (which I estimate to be about $5.5 billion/year). Most corporations pay a dividend and buy back shares (in order to provide a return to shareholders). Bill Koch once remarked (when he was a shareholder) that Koch Industries was so low he couldn't afford to purchase a nice house. Speaking of Bill Koch his net worth actually went down from $4 billion to $3.8 billion. Yes, a Koch brother did lose $200 million in one year! What is even more interesting is that Oxbow Energy (founded by Bill Koch claims returns of 30%/year while Charles Koch declared a 12% annual return in their 2014 January Discovery newsletter. Interesting how 3 out of 4 brothers from one family are billionaires. What happened to Frederick Koch?
Thank you very much for the post! Would you be willing to share your excel file from this blog post? I am teaching at the University of Kansas School of Business and would like to use the data in class. Specifically, I would like students to calculate for themselves the standard deviation and compare it to the one from the S&P 500. Is there a way to contact you? Thank you very much for your help!
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