Larry Ellison shows even billionaires struggle with liquidity

It’s not unusual for an ageing investor to consider reshuffling their nest egg. But when that investor is the 82-year-old Larry Ellison, co-founder of Oracle, things become altogether more complicated.

Oracle disclosed last week that Ellison, who still serves as chief technology officer and executive chair of the board, had put in place a plan to sell 50mn Oracle shares, currently valued at more than $7bn, in transactions between June and October. Days later, it said Ellison had yet to sell a share and that the plan was being cancelled. No reason for the reversal was given.

It isn’t hard to see why Ellison may have wanted the cash. Like many boomers, he is supporting the ambitions of his children — in this case Paramount Skydance boss David Ellison. The Oracle magnate is part of a group putting in more than $40bn of equity to fund a $110bn takeover of Warner Bros Discovery, having previously helped David buy Paramount at a valuation of more than $20bn.

It also seems plausible that Ellison can’t get hold of such huge chunks of money without selling equity. Oracle generates massive dividends for him, but even those only amount to $2bn per year. And Oracle disclosures show nearly a third of Ellison’s shares are already pledged “as collateral for personal indebtedness”.

But the patriarch’s flip-flopping on the sale reflects the fact that for top executives — even those whose shareholding is worth $175bn — generating liquidity from equity in the companies they run is not totally straightforward. Selling shares, even through “programmatic”, or pre-arranged, automated methods, is often interpreted as a bearish signal by outside investors.

And if the sale is big enough, it can itself push down the share price of the company. Elon Musk sold billions of dollars’ worth of Tesla stock in 2022 to fund his purchase of social network Twitter, now called X, at a moment when there were questions about the electric vehicle group’s growth prospects: its stock fell about two-thirds that year.

Oracle can ill-afford a further confidence knock. Its equity has halved in value over the past year as investors fret about its push into AI infrastructure and its debts of more than $150bn, with separate big obligations located off the balance sheet.

In this context, Ellison’s side quests into the media world are not great news for Oracle shareholders. The tie-up between Paramount Skydance and WBD is beset by legal challenges. Assuming the two do eventually combine, the resulting company will also be highly leveraged. Besides competing for Ellison’s time, any snafus raise the possibility that Ellison might have to sell further chunks of his software stock.

Ellison may not exactly treat Oracle shareholders like family, but they are undeniably tied up with the family’s sprawling empire, for better or for worse.

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