The recent surge in the share price of Oracle (ORCL -0.64%) briefly made CEO Larry Ellison the world's richest human, exceeding the vast fortune of Tesla (TSLA 0.34%) CEO Elson Musk.
The price of Oracle stock has since retreated a bit, putting Ellison back in second place. But it's worth asking: Where does Ellison have his roughly $384 billion of net worth invested?
As you can imagine, a person that wealthy would own many assets. And Ellison, now 81, certainly does. They range from planes, yachts and a sailing team to real estate and houses spread around the world. He also owns 98% of Lana'i, the sixth-largest Hawaiian island.
Image source: Getty Images.
But the bulk of Ellison's fortune is in three publicly traded companies -- software giant Oracle, electric car maker Tesla, and movie-media conglomerate Paramount Skydance (PSKY -3.00%).
Which of those three companies should less wealthy investors (that's everyone on the planet other than Musk) consider investing in?
Let's look at them a bit more closely.
1. Oracle surges
Ellison founded Oracle with two other engineers in 1977, though they first named it Software Development Laboratories. They adopted the Oracle name five years later and the company went public in 1986.
Over ensuing decades, Ellison accumulated enormous numbers of Oracle shares and today owns some 1.16 billion (about 41% of total outstanding). At today's share price of $301, that amounts to stake of about $349 billion.
The reason Oracle's share price surged last week (and briefly made Ellison the world's richest person) was that it reported quarterly results and, with them, the news that its remaining performance obligations -- expected future revenue from signed contracts that has not yet been collected -- surged during the quarter to $455 billion, a jump of 359%.
Multicloud-based revenue from Microsoft, Alphabet, and Amazon soared more than 1,500% in the quarter.
If you believe that cloud and data centers are going to continue to surge as revenue streams for big tech, Oracle is a great way to play it. The stock isn't exactly cheap relative to earnings -- the forward price-to-earnings ratio is 44 -- but that enormous backlog of business means lots of additional revenue and earnings coming down the pike, so an investment in Oracle at the current price could easily be justified.
2. Tesla fluctuates
Ellison is estimated to own about 45 million shares of Tesla, or 1.4% of the electric vehicle giant, which makes his stake worth about $19.1 billion at today's share price.
Tesla has certainly been a good investment over the years for those investors who bought in early and held on. Six years ago, the stock was at $16 and today, a share goes for more than $425.
But it's also been a roller coaster, as the share price is often closely associated with the company's flamboyant and unpredictable CEO. Thus it has fluctuated wildly in recent years as Musk has been distracted from day-to-day Tesla management by many other interests, from space exploration to buying Twitter to cutting government costs for President Donald Trump. The stock hit a peak in December and then plummeted more than 50% in the following months.
If you want to sleep well at night, you might limit your investment here.
3. Paramount's potential
Finally, Ellison and his family own about 77% of Paramount Skydance, a media conglomerate that was formed in August when Skydance Media, a media firm run by Ellison's son David, acquired Paramount, the legendary Hollywood studio and owner of CBS, among many other properties.
Paramount Skydance has a market cap of about $20 billion, which puts the Ellison family stake at around $16 billion.
Paramount stock languished for years before the merger as the company struggled to compete in a fast-evolving and cutthroat media industry and adapt to new technologies and changing consumer behaviors.
But with the recent merger, Paramount now has an influx of nearly endless money from one of the world's richest families. It also has a close connection to a major tech firm, which is likely to come in handy as technology continues to transform the entertainment industry.
David Ellison is already using his father's fortune to make some bold moves, from a recent $7.7 billion deal for rights to Ultimate Fighting Championship content, to a pending acquisition of Warner Bros. Discovery, which owns HBO, CNN and the Warner Bros. movie and television studio.
Trading at just 12 times future earnings, Paramount Skydance is a bargain at the moment.
Any media company that wants to survive and thrive in today's fast evolving environment will need lots of funding and technology. That could make this a stock worth putting a few bucks into.
