How To Invest Like A Billionaire

I was doing research on billionairs when I ran across this article IHere is an in Forbes I though I would pass along to my readers.

Dean White, 83, started building his billion-dollar billboard business in his teens, selling signs for his mother and father while in high school. After a stint at the University of Nebraska and graduating from the U.S. Merchant Marine Academy, White took over his family’s Whiteco Industries in 1946 and spent the next 50 years buying up a mix of conservative (billboards, apartments) and cyclical (hotels, construction) assets before selling the billboard division to Chancellor Media for $960 million.

Today he’s worth $1.4 billion and ranks 278th on the Forbes 400 list of America’s wealthiest citizens. These days White says he is giving equal weight to conservative and cyclical investments to get the best return on his cash.

On the conservative side of his portfolio, White is still invested in signage. With partners he owns and operates a Chinese billboard outfit, Whiteco Qingyu, which owns 550 billboards worth $95,000 each. He says he’d eventually like to get back in the U.S. market. White recommends investors by buy shares in a billboard company, such as Lamar Advertising (nasdaq: LAMRnews people ), which owns 150,000 billboards in the U.S. and Canada.

Invest Like A Billionaire: Read Dean White’s Investment Tips

White also owns a slew of apartments. “You don’t have the ups and downs in apartments that you have in other real estate holdings,” he says. Today he owns and manages 3,575 units from California to Connecticut.

But White says the average investor is better off buying shares in real estate investment trusts that own apartments, rather than buying and managing apartment buildings on their own. The reason: managing an apartment complex can be a costly headache. White recommends apartment REITs like billionaire Sam Zell‘s Equity Residential (nyse: EQRnews people ) or Archstone-Smith Trust (nyse: ASNnews people ).

The flipside of White’s portfolio is made up of assets that take advantage of economic cycles, like hotels and construction companies–investments he says you should get in and out of depending on macro trends. “We started out with a couple of Holiday Inns way back when,” says White. He built up a portfolio of midtier and high-end hotels, mostly Marriotts and Holiday Inns.

Last year, White Lodging Services sold 100 hotels (mostly Marriotts) to Black Entertainment Television founder and billionaire Robert Johnson for $1.7 billion, netting a “nine-figure sum.” The company still retains a lucrative management contract for most of the properties. White believes hotels are at their peak right now, saying, “Everybody is making money.”

If you can’t afford a hotel, White says investors should own REITs that specifically target  high-end hotel properties in urban areas. Two REITs that meet his criteria are:

LaSalle Hotel Properties (nyse: LHOnews people ). LaSalle owns and manages 32 upscale hotels in urban, convention and resort markets. Two recent purchases include the Holiday Inn Manhattan on Wall Street in New York, for $50.5 million, and the Graciela Burbank across the street from the Warner Bros. Studio Ranch in California, for $36.5 million. For the first nine months of 2006, LaSalle revenue rose 65% to $467.4 million, and net profits nearly tripled to $68.9 million, mostly due to the sale of the Chicago Marriott hotel. LaSalle shares rose 29% in 2006.

Host Marriott (nyse: HSTnews people ). The nation’s largest lodging REIT, Host Marriott operates 128 luxury hotels in the U.S., Canada and Mexico under posh brand names like Ritz Carlton and Four Seasons. The company is expanding abroad, using joint ventures to buy properties like the Hotel Arts Barcelona in Spain. For the first nine months of 2006, revenues increased 25% to $3.2 billion. Net income rose 21% to $565 million over the same period, due in part to the company’s acquisition of Starwood (nyse: HOTnews people ) hotel properties.

Another industry that White says has economic trends in its favor is construction. He says the labor shortages, especially in home building, make these companies extremely valuable. He recommends investing in national construction companies that are not exposed to one region and prefers those that build in urban areas. Check out Granite Construction (nyse: GVAnews people ), which works on both private and public sector projects, including roads, highways, tunnels, bridges, mass transit facilities and airports.

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