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"don't need to diversify their holdings to have a luxurious life". Good point, but they do need to diversify to fund billions on the kind of change-the-world p
by aresant 17y ago
"don't need to diversify their holdings to have a luxurious life".
Good point, but they do need to diversify to fund billions on the kind of change-the-world projects that they've expressed interest in in the past:
a) Alternative energy.
b) Genome / disease research & mapping.
c) etc.
The recent mega-philanthropy of gates / buffet / etc people @ the top realize that they have a chance to alter the course of human history in other ways that may require a ton of capitalization (vaccines, health, disease, geneome mapping, etc).
- cellis 17y agoI suppose cash is king but couldn't they could also simply take out loans on the value of their shares a la Ellison?
- evgen 17y agoThe danger in this is that it is quite possible that at ~36 P/E Google is near the upper limit of its practical valuation for the near future. If they borrow big against their holdings then they have to pay back the loan and also service the debt. If the share price drops then they would have to sell even more shares to cover the loan. As it stands now they will still have such a huge chunk of voting rights that it would take near unanimity against them to overturn their decisions and in return they get big piles of cash that they can probably get a better return on by placing bets on other ventures.
- wisty 17y agoIt's risky. If their new investments don't make any money, and google drops in valuation, they could be forced to sell a larger portion of their stake.