Yesterday, the former CEO of Microsoft (MSFT), Steve Ballmer, announced his intention to buy the Los Angeles Clippers from the embattled Sterlings for $2 billion. While the deal is by no means final, according to the LA Times, it appears likely to go through. Furthermore, although this is big news, the funding behind Ballmer’s acquisition of the Clippers is even more intriguing (and raises serious questions about Microsoft’s executive pay plan).
As mentioned by @PoliticalMath, the most interesting part of the deal pertains to how Steve Ballmer acquired the $2 billion necessary to purchase the Clippers. Ballmer, who is only the second person to become a billionaire from stock options from a corporation neither he nor a relative founded, made the $2 billion he plans to spend on the Clippers from his Microsoft stock in just the last eight months. According to Forbes, Ballmer owns approximately 333 million shares of Microsoft — three million more than Bill Gates, the company’s founder, and a staggering 4% of the overall company. In the last eight months, Microsoft’s share price has appreciated just over seven dollars, or more than twenty-percent. A quick calculation shows that Ballmer has made over $2.3 billion in the last eight months from his holdings in Microsoft alone.
This isn’t to say that you should immediately place all of your money into Microsoft; in fact, some have suggested that part of Microsoft’s recently positive stock performance is due to Ballmer stepping down from his position as CEO. But it does demonstrate that there is money to be made in the stock market, if one is smart about it.
(Of course, if the deal does go through, the Sterlings stand to make a 15,900% return on their initial $12.5 million investment in the Clippers).