Saudi Arabia’s de facto ruler Mohammed bin Salman wanted to see his country’s crown jewel, Saudi Arabian Oil Co., or Aramco, valued at $2 trillion. Market reality got in the way and he had to settle for a mere $1.7 trillion in last week’s initial public offering, which also was limited to regional investors.
But the first day of trading Wednesday saw the shares limit up—a rise of 10% on the local Tadawul exchange. Another performance like that—and strong social and financial incentives not to sell make that a distinct possibility—will see the sought-after $2 trillion mark breached.
Looked at another way, though, the company’s value is absolutely pedestrian. Aramco’s 1.5% free float means shares owned by the public are worth only $28 billion. By contrast, Microsoft and Apple have floats worth $1.08 trillion and $1.06 trillion, respectively, if one excludes insiders.
In the energy world, North American exploration and production companies Occidental Petroleum, Marathon Petroleum and Canadian Natural Resources are all larger on this metric. Super major Exxon Mobil has a float worth 10 times as much as Aramco at nearly $300 billion.
Warren Buffett ’s 89th birthday is a good occasion to revisit a question that has been weighing on financial minds lately—what price to put on Greenland. As far as we know, President Trump hasn’t contacted the Oracle of Omaha on the question of valuation, much less negotiating tips. But one of Mr. Buffett’s earliest letters to investors has an interesting way to think about such outlays. He quipped that Queen Isabella of Spain, who gave Christopher Columbus the equivalent of $30,000 to find the New World, could have instead invested it at 4% interest and had $2 trillion by 1963—nearly $18 trillion today. Denmark spurned an offer from President Harry Truman of $100 million in 1946 to sell Greenland. It is unlikely that a then-17-year-old Buffett, already a budding value investor, would have made the offer. The same sum invested in the S&P 500 would have compounded since then, with dividends reinvested, to a whopping $163 billion.
Denmark may have missed a huge opportunity, but don’t judge too harshly—the future author of “The Art of the Deal” was only born that year.
No, it isn’t by installing a credit card reader in the lavatory or making us stand (but let’s not give them any ideas). Airlines already have charged extra for “preferred seating” as in I would prefer not to sit way in the back of the plane next to a screaming baby. Apparently, though, those seats (which I often seem to get) make it far more likely that you’ll survive. I wrote about this at work.
“Ladies and gentlemen, we are now ready for general boarding. Our diamond preferred ‘more likely to survive a crash’ passengers are welcome to come to the gate.”
You won’t be hearing an announcement like this at the airport any time soon, but it is a fact that some of the most and especially the least expensive seats on an aircraft give you better odds of living should tragedy strike. KLM India came under fire for spelling this out in a since-deleted tweet.
Discussing air travel fatalities isn’t only in bad taste but is believed to be bad for business. Or is it? U.S. airlines have found an additional source of income in recent years in charging for preferred seating—generally those that might have some extra legroom or let you deplane more quickly.
Seats at the back of the plane are therefore less likely to command a premium above the advertised fare, but perhaps they should according to KLM India’s tweet. Already-expensive ones near the front are slightly safer, but the fatality rate “is least for seats at the rear third of a plane.”
I wrote about the phenomenon of tech stock doppelgängers showering riches on people who can act quickly, but mostly parting fools from their money.
Zoom Technologies is carrying on a long American tradition: making people rich by accident.
Not to be confused with Zoom Video Communications, a unicorn that went public in April, making its backers truly wealthy, the similarly named penny stock appears to have benefited from mistaken identity. A $1,000 investment in late March would have been worth over half a million dollars by mid-April. Even now, assuming one were able to find a buyer, it would be worth $175,000.
Zoom joins the likes of doppelgangers Tweeter and Snap Interactive. Similarly confusing episodes happened in the last tech bull market. For example, penny stock Appian Technology surged by nearly 19,000% because it shared a ticker with a hot initial public offering on Nasdaq, AppNet, in 1999.
Of course all of these scenarios enriched people already owning the shares of the “wrong” company, and only if they acted quickly. Buyers fooled by similar names or tickers usually regret it. Not always, though. Mistaken buyers of food company Sysco back in March 2000—when red-hot Cisco Systems briefly the world’s most valuable company—have made 571% since then compared with a loss of 12% by owning the “correct” stock.
Pundit Stephen Moore withdrew last month from consideration for a position on the Federal Reserve Board. Now he is joining a group that wants to “perform Fed-like duties,” but not for traditional money. He will, according to Fox Business, join Decentral, which aspires to be “the world’s decentralized central bank,” performing a stabilizing role for cryptocurrency.
This raises a few questions. Bitcoin, the most valuable cryptocurrency, is hugely volatile in dollar terms, but its supply is famously limited by design. Its appeal lies in the lack of a central bank.
But supposing Mr. Moore’s outfit were able to stabilize values, would it be hawkish or dovish? Back when Barack Obama sat in the White House, Mr. Moore decried the Fed’s “easy money policy” as the recipe for the next crisis and advocated a return to the gold standard. When he was hoping to be nominated by Donald Trump, though, he advocated cutting rates by half.
Crypto investors eager to see their purchasing power maintained would prefer the 2015 version of Stephen Moore.