Who Got Rich This Week: Rackspace Founder and Mega-merger Investment Banker

May 17 2014, 8:48am CDT | by

Each week at Forbes we scan our database of corporate insiders to see who got richer from the action in the stock market.

Rack city

San Antonio native Graham Weston made the best investment his life in the late 1990s when he provided start-up capital to the nascent company that would become Rackspace. The web-hosting and cloud-computing firm, which Weston would lead as CEO until 2006, continued to grow — even despite a less-than-stellar IPO during the pre-crisis market of August 2008 — eventually minting a ten-figure fortune for its largest shareholder. But Weston’s net worth topped out at $1.3 billion in 2013; then Rackspace’s stock price began to slide. Facing stiff competition from giants like Amazon and Google, it slipped from as high as $81 per share in January 2013 down to below $27 per share earlier this month.

But Rackspace began experiencing a mild resurgence earlier this week after a strong first-quarter earnings report that beat expectations, including a 16% increase in revenue to $421 million. By Friday, investors began rapidly snapping up Rackspace stock in a frenzy that pushed its price past $37 per share, a 39% increase from a week ago. The source of enthusiasm? News broke late Thursday that the company had hired Morgan Stanley to explore potential partnerships or acquisitions. The surge has provided a sizable one-week bump to its chairman’s net worth. Weston, who owns 13.7% of the company, saw his holdings improve $211 million, from $569 million to $780 million by midday Friday. If buyout talks heat up, Weston could find himself nearing the billionaire ranks again this year.

Merger mavens

Global investment bank Moelis & Company was founded in 2007 by a cadre of ex-UBS financiers. Since then, it has advised on some of the most notable megadeals in recent history, including Anheuser Busch’s $61.2 billion sale to InBev, the American Airlines and US Airways merger and Heinz’s $28 billion sale to Berkshire Hathaway and 3G Capital. Most recently, it presided over the implosion of what would have been the largest merger in advertising history — the $35.1 billion deal between Omnicom and Publicis that collapsed last week. If investors think Moelis & Co. merit any of the blame, they’re not showing it. The bank, which executed its initial public offering in April, is up 11% in the past week, closing Thursday at $29.15 per share and a market capitalization of nearly $1.6 billion

Kenneth Moelis, the company’s founder, chairman and ceo, has benefited the most from the company’s stock movement. An industry veteran who started out at Drexel Burnham Lambert in 1981, Moelis is the largest shareholder of his namesake firm, with a 26% economic stake that was worth $333 million when the company publicly listed a month ago at $25 per share. In the past week his stake has appreciated by $39 million from $350 million to $389 million.

Despite the IPO, Kenneth Moelis isn’t relinquishing any control of Moelis & Co., retaining 97% of its voting shares. He told the New York Times, “It’s my largest investment in the world, and I’m protecting it.”

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

First Italian female astronaut ready for spaceflight
Rome, Nov 24 (IANS) History will be made Monday with the first ever Italian female astronaut set to go into space for a mission on board the International Space Station (ISS).
 
 
Mummy wearing jewellery unearthed in Egypt
London, Nov 23 (IANS) Spanish archaeologists have discovered about 4,000 years old female mummy wearing rare jewellery in Egypt.
 
 
Exercise and fasting could boost brain's functions
Washington, Nov 23 (IANS) Exercise along with occasional fasting is good for boosting the brain's neurons, shows a new research.
 
 
One infant dies in Pakistan hospital
Islamabad, Nov 23 (IANS) One more infant died due to lack of oxygen in an incubator and negligence of the hospital administration in Pakistan, bringing the number of such deaths to 19 in the past five days.
 
 
 

Latest from the Network

Political leader shot dead in Pakistan
Karachi, Nov 24 (IANS) A leader of the Awami National Party (ANP), Ziauddin was gunned down Sunday by unknown assailants in Orangi Town in the Pakistani city of Karachi, media reported. According to police, the leader...
Read more on Politics Balla
 
Israeli cabinet pushes to make country 'Jewish state' by law
Jerusalem, Nov 24 (IANS) The Israeli cabinet approved a bill Sunday, which enshrines in law that Israel is the national homeland of the Jewish people and that this right is unique to them. Fifteen ministers voted in...
Read more on Politics Balla
 
When Lily Allen's sex life 'lacked magic'
Los Angeles, Nov 24 (IANS) Singer Lily Allen, who says she didn't enjoy a great sex life until she was in her mid-20s, believes sex needs to be reprented as an "emotive experience" in popular media. She says the media...
Read more on Celebrity Balla
 
Bangladesh beats Zimbabwe in second ODI
Dhaka, Nov 24 (IANS) Bangladesh beat Zimbabwe by 68 runs in the second one day international (ODI) at the Zahur Ahmed Chowdhury stadium in Chittagong Sunday, to go 2-0 up in the five-match cricket series. Batting...
Read more on Sport Balla
 
Stand up for your rights, Imran Khan tells Pakistanis
Islamabad, Nov 24 (IANS) Pakistan Tehreek-i-Insaf (PTI) chief Imran Khan said Sunday that the people of Pakistan must stand up for their rights, when the party holds a rally Nov 30 in Islamabad. Addressing a public...
Read more on Politics Balla
 
Ryan Reynolds' 'scary' father
Ryan Reynolds thought his father was ''scary''. 'The Proposal' star - who is expecting his first child with his wife, Blake Lively - has admitted that his dad worked incredibly ''tirelessly'' to provide for their family...
Read more on Celebrity Balla
 
Demi Lovato 'serious' about boyfriend
Demi Lovato is getting ''serious'' with her boyfriend. The 'Neon Lights' hitmaker - who is currently dating 34-year-old Wilmer Valderrama - is reportedly hoping he will pop the question soon. A friend of the star said...
Read more on Celebrity Balla
 
Scott Disick 'excited' to meet baby
Scott Disick is ''excited'' to meet his new baby. The television personality - who already has Mason, 4 and 2-year-old Penelope with his longtime girlfriend Kourtney Kardashian - can't wait for their son or daughter to...
Read more on Celebrity Balla
 
Jessie J wants beau like her dad
Los Angeles, Nov 24 (IANS) A perfect man for singer Jessie J would mean someone like her father. The 'Bang Bang' hitmaker is currently dating singer Luke James. She says she loves the way her social worker father...
Read more on Celebrity Balla
 
Heavy rains in Morocco leave six dead, 10 missing
Rabat, Nov 24 (IANS/EFE) Six people were killed and 10 others reported missing in heavy rains in southern Morocco, official sources said. According to health officials, the tragedy happened in an area outside...
Read more on Politics Balla