For Texas banker D. Andrew Beal, holding on to his money in boom times and spending it when things go bust has paid off in a big way.
The recently released Forbes 400, a list of the richest people in the U.S., shows that Beal was the biggest gainer among the super rich.
He tripled his wealth from the previous year, rising from $1.5 billion in 2008 to $4.5 billion in 2009.
The gain elevated him from No. 321 on last year’s list to No. 52 this year.
Beal’s success ran counter to the general trend that saw the collective net worth of the 400 decline by $300 billion.
Warren Buffett, nicknamed the Sage of Omaha for his ability to read the markets, led the losers by dropping a cool $10 billion. Not to worry, he still remains No. 2 on the list with a net worth of $40 billion.
Bill Gates is No. 1 again with a net worth of $50 billion, down $7 billion from the previous year.
Beal’s strong showing is a tribute to his contrarian investment strategies.
A college dropout, he made his money early on by buying undesirable real estate, fixing it up and making a profit on rents or resale.
Then, in 1988, at the height of the savings and loan crisis, Beal founded the bank that later became Beal Bank.
As a banker, he became, according to Forbes magazine, a “one-man toxic-asset eater,” gobbling up loans that other banks were willing to unload at low rates and then squeezing out profits.
But in 2004, with subprime mortgage market booming, Beal took a time out and stopped making deals.
“Beal shrank his bank’s assets because he thought the loans were going to blow up,” Forbes wrote. “He cut his staff in half and killed time playing backgammon or racing cars. He took long lunches with friends, carping to them about ’stupid loans.’”
Then in 2008, with the collapse of Bear Stearns and the onset of the recession, Beal started buying again, picking up the loan packages - real estate and company debt - that other banks were dumping as fast as they could.
In addition, Beal began making loans to companies in trouble. In these cases, he could charge high interest rates because he was, in effect, the lender of last resort.
And now his bank is part of a proposed deal with his friend Donald Trump to buy back Trump’s casino business, Trump Entertainment Resorts, Inc.
Beal, who is 57, may be best known for his foray into the world of high stakes poker, beginning in 2001.
Setting the stakes amazingly high, he took on a group of the world’s best poker players known as “The Corporation.”
In the month of February 2006 alone, Beal the poker player went on a roller-coaster ride where he was up $13.6 million at one point only to lose $16.6 million later on.
For a time, Beal was also betting on outer space, having started Beal Aerospace in the hope of building a launcher propelled by hydrogen peroxide to send satellites into orbit.
Started in 1997, the company ceased operations in 2000, because, Beal said in a press release, it could not compete with NASA.
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