How the Rich 200 Invest: Gina Rinehart

For all the talk about Gina Rinehart in recent weeks, her motives for boosting her stake in Fairfax Media to 19 per cent are still largely unknown.

People can speculate, and there are no shortage of commentators who are willing to do so, about what she is trying to achieve but for now, at least, it remains just that: speculation.

As such, it is difficult to critique the approach Rinehart has used to boost her stake in Fairfax from a pure investment perspective. It is also difficult to derive lessons from it for the benefit of other investors.

What we do know is that Rinehart is adopting an approach that differs from the one she has favoured in building her mining empire.

Rinehart became the world's richest woman by demonstrating an understanding of the value of perseverance and strategic partnerships.

She did not rush to sell mining interests when prices were depressed and left it to skilled partners, principally Rio Tinto, to develop her iron ore tenements. (Rinehart is still yet to operate a mine herself.)

Rinehart’s raid on Fairfax also differs from the approach favoured by fellow West Australian billionaire Kerry Stokes when he relied on a significant amount of backroom nous to wrestle control of West Australian Newspapers before successfully merging it with his Seven Network business.

It is also worth remembering that a company’s share register has little to do with the value of the underlying business.

Whether Rinehart takes over Fairfax or not, senior management will still need to address the same problem: how to boost earnings in a rapidly changing industry.

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