Prince Alwaleed may have made a very bad $500 million bet on Russian energy companies just before the Ukraine war

Saudi billionaire Prince Alwaleed bin Talal is a legendary investor. Some will put him there with Warren Buffett. Prince Alwaleed’s net worth of $17 billion makes him the richest person in Saudi Arabia.

He can attribute his massive fortune to a three-decade career of picking impressive stocks. For example, in 1990 he made his first investment in Citicorp. That initial investment of $207 million eventually turned into billions as Citicorp merged into Citigroup today.

Another legendary example occurred in 1997 when Prince Alwaleed paid $115 million for 5% of a small company called…Apple. He sold his shares for a massive profit in 2005 and FYI, today a 5% stake in Apple would cost you about $135 billion. Today he owns large stakes in dozens of companies ranging from Twitter to Lyft and Four Seasons.

Unfortunately, everyone loses the mark sometimes. According to a report in BloombergPrince Alwaleed bet $500 million on three Russian energy companies through his investment firm Kingdom Holding Company, sometime in February. Why is this unfortunate? Because, if true, these bets were made before Russia invaded Ukraine. As it is, before Russia turned itself into a global pariah, which, in turn, completely decimated the fortunes of its energy sector.

Regulatory filings for Bloomberg claims show that the kingdom has invested in the following three companies:

Bloomberg reports that the investments were made in February. As a reminder, Russia invaded Ukraine on February 24. If the report is correct and if the kingdom keeps these investments, their value has been destroyed.

As just one example, below is a graph of Lukoil’s stock price from a year ago. Note what happened in March:

In case it wasn’t clear, you’ll see a drop from $100 per share in November 2020 to $90 in February… to $6.96 today. That’s a 92% drop, both before and after the invasion.

Gazprom started the year trading at about $8.00 a share. Today, one share would cost $1.10. This is a decrease of 86%.

Rosneft has been the best performer of the three, having lost only 25% of its value since January 1 when it traded at $540 a share versus $400 a share today.

Hypothetically, if the kingdom divided its $500 million investment equally among these three companies back in February, aka $166 million per company, here’s how those investments continue today:

  • Lukoil = $13.30 million
  • Gazprom = $23.24 million
  • Rosneft = $41.5 million

total = $78.04 million

If true, and for records Kingdom Holdings declined to respond to Bloomberg’s inquiries about whether it still stands, that would be an 84% drop from $500 million.

Yasser El-Zayat/AFP/Getty Images

The Bloomberg report says the investments reflect the “delicate relationship” between Saudi Arabia and Russia, as other Middle Eastern countries withdrew from Russia after the war began.

You may remember that a few years ago, Prince Alwaleed was held at the Ritz-Carlton Hotel in Saudi Arabia for 83 days in an “official anti-corruption investigation” by the Saudi government. No formal charges were brought after some kind of unannounced settlement was reached between the billionaire, one of the country’s richest people, and the authorities. Alwaleed is now one of the country’s most prolific investors, known for his long-term investments and a fan of Warren Buffett, who has likened himself to him in public interviews.

Kingdom Holding is also backed by Saudi Arabia’s official sovereign wealth fund, which is controlled by Crown Prince Mohammed bin Salman, a cousin of the Alawi prince. The Saudi sovereign wealth fund bought a 16.9% stake in Kingdom Holding in May.

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