Nathan Tinkler falls off rich list

From $1.13 billion to less than $18 million in two years.

Andrew Mudie

Andrew joined the growing team of Motley Fool freelance writers in mid-2013 following years of personal development as a passionate self-taught sharemarket investor. At the time, Andrew was an engineer by trade, writer by hobby, and an investing nerd by passion who spent far too many breaks reading, writing and learning. Andrew’s first investing lesson came with his first stock selection in 2011 when takeover rumours caused a spike and subsequent plunge in the share price of Woodside and then the 21% fall in the market through mid-2011. The next four years of investing saw Andrew dabble in a vast array of strategies until settling on his favourite investment methodology, which is closely aligned with that of the Motley Fool: Fundamentals-based long-term buy-and-hold of great companies at great prices.

Published September 20, 2013 5:02 pm AEST

Ex-Whitehaven Coal (ASX: WHC) major shareholder and one-time billionaire Nathan Tinkler has suffered a dramatic fall from the top of the BRW Young Rich List. Having topped the list in 2011 with an estimated net worth of $1.13 billion, Mr Tinkler has sensationally fallen completely off the list in 2013, failing to meet this year's cutoff of $18 million.

Mr Tinkler sprung into the list in 2008 after having made an estimated $440 million in the transaction of a mine lease, which was purchased using a large loan and subsequently sold to Macarthur Coal (ASX: MCC). In 2009 he secured loans to purchase the Maules Creek mine through his company Aston Resources, which subsequently floated on the ASX and merged with Whitehaven Coal. Mr Tinkler's highly leveraged 19% stake in Whitehaven ultimately brought his downfall as the slowing of the mining boom punished the company's share price and forced creditors to re-coup some of their losses.

In recent months Mr Tinkler had one of his last remaining assets seized, speculative miner Aston Metals. In addition, he has been forced to sell his private properties and his numerous boats and planes purchased in previous years. Amazingly, averaged out over the two years, his worth has declined by an average of $10 million per week.

The Rich List, which features 100 of the wealthiest self-made Australians under 40 years of age, is this year dominated by people in the IT and sports industries, making up 46 places. The list included 25 debutants and retired MotoGP rider Casey Stoner is the youngest person on the list at age 27, with an estimated worth of $20 million.

Foolish takeaway

If you end up with a net worth of $1.13 billion after a couple of years' work, it might be worth giving Mr Tinkler a call to see if there were any key lessons learnt. Aside from that, Mr Tinkler was largely brought down by an overexposure to the mining, and specifically coal, sector and was highly leveraged. Investors should take note that diversification among sectors and asset classes is important for growing long term wealth and that leverage should only be used in moderation.

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Motley Fool contributor Andrew Mudie does not own shares in any of the companies mentioned.

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