Methods of Prosperity

Last week on Methods of Prosperity:

Larry Ellison was born in the Bronx, New York, on August 17, 1944, to a Jewish mother who gave him up for adoption. In 1977, his friend Bob Miner founded Software Development Laboratories (SDL). The company won a contract bid to produce a database for the CIA. They became the provider of software to the US government. SDL shipped its first commercial SQL relational database management system in 1979. They named it Oracle version 2 (there was no V1). SDL was later known as Oracle. Oracle faced financial trouble during the early 1990s recession. Oracle recovered and grew to over $10 billion in sales and over 100,000 customers. In 2004, Oracle acquired many companies after the dot com crash. In 2021, Oracle acquired healthcare SaaS company Cerner for $28.3 billion. Ellison’s net worth is between $115 - $138 billion. Much of this from his stake in Oracle and other investments, including Tesla.

The following is Methods of Prosperity newsletter number 23. It was originally deployed November 23, 2023. As of August 1, 2024, original subscribers have received up to issue number 59: Howard Schultz (conclusion).

Part 23

TL;DR

Bernard Arnault is one of the wealthiest individuals. He’s often the world’s richest man. This title fluctuates depending upon the value of his assets. He inherited a civil engineering and property company from his father. Bernard Arnault transformed it into a real estate business. He later acquired the struggling textile empire Boussac group. This led to the formation of Financière Agache, the cornerstone of his business empire. From that point, he acquired majority ownership of LVMH Moët Hennessy – Louis Vuitton. This luxury conglomerate controls many prestigious brands. Arnault’s real estate portfolio is extensive. His current net worth is around $187 billion.

Key lessons:

• Leave an inheritance to future generations.

• Distress presents your opportunity to buy.

• Acquire as much real estate as you can.

• Acquire as many businesses as you can.

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Marie-Josèphe Savinel, had a fascination with Christian Dior. In 1947, Christian Dior introduced the “New Look”. It featured big volume, miniature waists, and prominent busts. This revolutionized women’s fashion. Dior brought opulence and femininity back into the industry. As well as elegance, attention to detail, and beauty. Dior reintroduced high heels, emphasizing the figure and elongating the legs. The brand prides itself on haute couture. Many of its garments are hand-sewn. Dior considers every detail, making it one of the leading players in this exclusive field. Celebrities and fashion icons adored Dior. Marilyn Monroe, Elizabeth Taylor, Grace Kelly, and Princess Diana. Dior also made a mark in the perfume industry. Recall iconic fragrances like “Miss Dior,” “J'adore,” and “Dior Homme”.

On March 05, 1949, Marie-Josèphe gave birth to Bernard Jean Étienne Arnault in Roubaix, France. Bernard attended the Roubaix lycée and the Faidherbe lycée in Lille. He then went on to study at the Ecole polytechnique. He inherited a civil engineering and property company from his father, Jean Léon Arnault. The name of his father’s company was Ferret-Savinel.

I know what you’re thinking. “Wait a minute, Sean Allen Fenn. Another rich kid who inherited his fortune?”

Before you give up on yourself for not being born with a silver spoon in your mouth, remember this.

The reason we build something for our children is so that they can have it better than we did. That’s called progress. You might want to be on an upward trajectory, not for yourself, but for future generations – end of rant.

Bernard took over Ferret-Savinel in 1978 and became its president until 1984. In 1976, Bernard persuaded his father to sell off the construction side of the business. Instead, he advised him to focus on real estate. Ferret-Savinel shifted in focus to real estate, renaming to Férinel Inc.

Let me interject one more time here. Young Bernard recognized the rewards of investing in real estate. Without this foundation, he would not be one of the wealthiest individuals of our time.

In 1984, the Boussac group, which owned Christian Dior at the time, had fallen into bankruptcy. This was his chance to make a life-changing acquisition. The French government sought a buyer for the struggling textile empire. It included the renowned fashion brand. Bernard Arnault acquired Boussac Saint-Frères. He used financing from the French financial institution Lazard Frères. He also combined funds from his family. Arnault restructured Boussac. He sold off unprofitable divisions including Boussac’s disposable-diaper division. He sold off most of its textile operations for $500 million. Arnault centered the business around Dior. He renamed it Financière Agache. He became the CEO of the holding company.

Arnault’s family business grew 20X in two years. Under his control, the once-bankrupt company pushed into the black. It wasn’t without growing pains. Approximately nine thousand employees lost their jobs. Financière Agache became the cornerstone of Bernard Arnault’s business empire. Financière Agache is the holding company of LVMH Moët Hennessy – Louis Vuitton. Mr. Arnault became the majority shareholder of LVMH Moët Hennessy in 1989. Louis Vuitton became part of LVMH in 1987. Moët et Chandon and Hennessy merged with Louis Vuitton.

LVMH controls around 60 subsidiaries that manage 75 prestigious brands. LVMH’s portfolio includes Tiffany & Co., Christian Dior, Fendi, Givenchy. It includes Marc Jacobs, Stella McCartney, Loewe, Loro Piana. It also includes Kenzo, Celine, Sephora, Princess Yachts, TAG Heuer, and Bulgari.

Since 1978, Bernard Arnault owns and controls Groupe Arnault, the private holding company. Groupe Arnault, offered to buy the 25.9% of Christian Dior shares it did not already own. LVMH acquired Christian Dior in 2017 in a $13.1 billion deal (€6.5 billion). The Arnault family consolidated its control over Christian Dior. The Arnault family became the only declared major shareholder in Christian Dior. This deal brought the entire brand under the LVMH umbrella. LVMH integrated Christian Dior Couture. The transaction simplified the ownership structure. It strengthened LVMH’s fashion and leather goods division. The Arnault family group currently owns in total 97.5% of the share capital of Christian Dior. In 2022, Bernard Arnault restructured Financière Agache. It became a limited joint-stock partnership, emphasizing long-term family control over LVMH.

Arnault’s real estate portfolio is not known to the public, but it’s extensive. He owns homes in France, the United States, and other countries. This includes a mansion in Paris’ upscale 16th arrondissement. It includes a 5,000-square-foot estate in Beverly Hills. It includes a 12-bedroom mansion in the Hamptons, and a vineyard in Burgundy, France.

Financière Agache holds not only luxury brands. It owns a portfolio of diversified financial investments. Arnault also owns a significant amount of real estate through Groupe Arnault.

In conclusion, Bernard Arnault’s current estimated net worth is $187 billion as of August 1, 2024.

I like you,

– Sean Allen Fenn

Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Your feedback is welcome. For more information about the author, please visit seanallenfenn.com/faq.