Facebook Investor Spending Month's Salary Exposes Hype

By Danielle Kucera and Douglas MacMillan | Bloomberg – 20 hours ago

Companies:

• Facebook, Inc.
• Zynga, Inc.
• Nasdaq OMX Group Inc.

Ryan Cefalu, who lives with his wife and two kids in Baton Rouge, Louisiana, saw in Facebook Inc.'s (FB) much-anticipated initial public offering a chance to buffer his retirement fund. His expectations fizzled along with the stock within the first minutes of trading.

"It's disheartening to know that things get over-hyped," Cefalu, a 34-year-old data-systems manager who spent about $4,000 on the stock, said in an interview. "That's about a 12th of my annual income -- so a month's salary. I'm trying to do an on-my-own retirement kind of thing."

Facebook, a site used by 901 million people worldwide, allocated more than 25 percent of shares to retail investors, said two people familiar with the offering who asked not to be identified because the process was confidential. That means the value of stock bought by that group for $38 in the IPO has dropped by at least $630 million in total, based on the closing price of $32 yesterday and assuming investors held onto the stock. 

While asset managers and hedge funds got to buy the stock in private trading years before the IPO and investment banks made money in the offering, small-time investors had to wait until last week's IPO for a piece of the action. The outcome: After Facebook and its underwriters misjudged demand in pricing the IPO and glitches on the Nasdaq hampered trading on the first day, the world's largest social-network website lost 18 percent in three days. The stock is still about 16 percent under its $38 IPO price after paring some losses yesterday.

‘Should I Bail?'

Facebook, the biggest technology IPO in history, turned into a quagmire of blame. Buyers of the stock sued the company, Nasdaq OMX Group Inc. and the underwriters, claiming they were misled. The U.S. Securities and Exchange Commission and the brokerage industry's watchdog both said they may review the offering, and the scrutiny prompted Morgan Stanley, the lead underwriter, to defend its handling of the IPO in a statement.

"I thought it would be fun to get in on the initial frenzy," said Linda Lantz, an online marketer in Granite Bay, California, who bought 100 shares. "Now it makes me think ‘Oh god, should I bail or is it going to come back?'"

For Cefalu, whose children are age 12 and 1, the first-day glitches meant more than a bad day of trading: they made him buy twice as many shares as he intended after an order he canceled went through hours later, he said. With shares of Zynga Inc. slumping along with Facebook, he estimates he lost a combined $2,250 as a result of the Facebook debut debacle.

Technical Problems

Michael McClafferty, a freshman finance major at Michigan State University, saw his "first big investment" turn into a $3,000 loss when he sold the shares at $35.

"I didn't want to lose more," McClafferty said. "I didn't know what to do."

The 19 year-old student estimates he spent $8,000 more than he wanted to while repeating orders that wouldn't go through on the first day, and failing to cancel them because of the technical problems.

"I didn't know what happened," he said. "Then I was like, ‘they should be able to do something about it.' They messed up pretty big from what I see, and it hurt more people than just me."

Retail Investors

On its debut, the Menlo Park, California-based website jumped to $45 at the start of trading, which was delayed 30 minutes, before ending the day up 0.6 percent at $38.23. It paled in contrast with Google Inc.'s 18 percent jump in its 2004 initial public offering, Visa Inc.'s 28 percent gain in 2008 and LinkedIn Corp.'s 109 percent surge last May.

"The reaction of the retail investor is ‘Wow, what a flop,'" Jay Pestrichelli, co-founder of the Omaha, Nebraska- based investment adviser Zega Financial, said in an interview.

Larry Yu, a spokesman for Facebook, declined to comment.

Facebook increased the number of shares sold and the price range days before the IPO, raising $16 billion and valuing the company at $104.2 billion.

Pat Brogan, a Yahoo! Inc. manager who trades on sites run by E*Trade Financial Corp. (ETFC) and Fidelity Brokerage in her spare time, called the experience of buying Facebook stock the "biggest fiasco" in her 30 years of day trading.

"They flooded the market with so many shares," Brogan said. "I'm actually going to dump them if they get back to $38."

Big Gamble

Demand from retail buyers was higher than normal for Facebook, with personal investment website Sigfig.com seeing 10 times more orders than it had for other recent technology IPOs, said Terry Banet, chief investment officer for the site.

"Facebook wanted to get more retail involvement and they succeeded," Banet said.

Some investors managed to take advantage of the initial gain. James DiMaggio, a 29-year-old product line sales manager at Ametek Inc. in Morton, Pennsylvania, said he bought 200 shares at $38, sold half for $40.98 and made about $280.

"The other half is now tanking," said DiMaggio, who estimates his losses so far at $320. "It was really exciting in the beginning. I don't gamble, and this is obviously a gamble."

Long-Term Potential

In the wake of the stock's losses this week, small-time investors took to the Web to express their agitation on sites including Twitter Inc. and online investing community StockTwits Inc.

"There's a lot of questioning about the IPO process in general and a sentiment that the real investor is getting taken by the larger Wall Street," said Phil Pearlman, executive editor of StockTwits.

Some investors still see potential in the long term. At Sigfig, 7 percent of users who bought Facebook on May 18 sold it the same day, below the 15 percent to 31 percent first-day flipping of stock that has been more typical of recent technology IPOs, according to Banet.

"Short term fluctuations don't bother me," said Charles Landry of Sacramento, California, who bought 1,000 shares on May 18. "Facebook has the potential to be, in the long term, one of the iconic companies in Silicon Valley, a la Google, a la Apple."

Renee Morrison, who runs accounting at Empyrion Wealth Management in Roseville, California, had never bought a stock in her life before investing in Facebook last week. She too plans to wait it out, she said.

"I have been very well educated and prepared that it's kind of like gambling, there's no guarantee," Morrison said.

To contact the reporters on this story: Danielle Kucera in San Francisco atdkucera6@bloomberg.net; Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

http://finance.yahoo.com/news/facebook-investor-spending-months-salary-073842218.html

Ferrari Crackdown: Italy Declaring War on Tax Cheats

By NICK SCHIFRIN (@nickschifrin) and PHOEBE NATANSON

May 22, 2012

The Ferrari races through a small Italian town, accelerating around cobbled street corners. A police officer stops the car that does 0-60 in 3.5 seconds. The officer asks the driver for his license, registration – and tax registration ID.

Across Italy police are cracking down on Ferrari and Lamborghini drivers, but not because they are driving too fast. Italy, like so much of southern Europe, is drowning in debt, so police are pursuing drivers to make sure they are declaring – and therefore paying taxes on – earnings that would allow them to afford cars worth as much as half a million dollars.

The targeting is part of an ongoing war on tax cheats, an attempt to shore up $2.5 trillion of the country's public debt and change a culture that has often prided itself on avoiding taxes. Tax authorities have long carried out much-publicized checks on owners of luxury cars, yachts, even nightclubs that don't issue proper receipts. But since the unelected, technocratic government took power in November, it has made enforcing tax collections a priority.

The crackdown seems to be working and -- some say – slowly changing the tax culture. Italian officials say they have discovered more than $12 billion in unpaid taxes already this year, and have identified more than 2,000 luxury car owners who underpaid taxes.

"These people are pushed to defraud by the mirage of easy money, to allow themselves the luxuries that they would otherwise not be able to afford -- luxuries that are often the first clue" they aren't paying enough taxes, Italy's tax police said in a recent statement.

But the crackdown has triggered counterattacks. Tax collection branches of the national revenue agency have been targeted with letter-bombs and Molotov cocktails – more than 250 attacks in the last year, the agency says. One businessman held an employee of a tax office hostage for six hours at gunpoint, saying he was desperate because he couldn't afford to pay off a $1,250 debt.

Some of the attacks have been claimed by anarchists, but the violence is a sign that regular Italians are suffering as southern Europe struggles through recession after recession. Twenty-three small business owners have committed suicide this year, according to the Small Business Association, and suicides motivated by economic difficulties increased 52 percent from 2005 to 2010.

Last week, Prime Minister Mario Monti visited the tax authority's Rome headquarters and said army and intelligence officials would support police to increase security for tax collectors. He argues that rich Italians' avoiding taxes hurts the poorest Italians and so stands by the crackdown, saying tax cheats "are giving poisoned bread to their children."

Ferraris for Fiats

Police have found owners who were barely concealing cheating. One developer in Perugia who police often saw "speeding through town" in his Ferrari, Maserati or Mercedes had registered his cars in his mother's name. Police discovered he hid 7 million euros of property sales in the last three years.

Or there was the case of the plumber in Pescara who owned three homes, used 30 bank accounts and drove a Ferrari.

"It is not enough to put your big car in a relative's name to trick the inspectors," mocked the tax police in a recent statement.

Police have arrested 80 people so far and are investigating 2,000 more.

In a conversation with ABC News, one Ferrari owner who declined to give his name admitted many Ferrari owners have reason to be scared.

"Those who declare their taxes correctly are not [scared], but many have the cars registered under other names and companies or do not declare enough earnings to be owning one," said the owner, who used to be president of a Ferrari owners club. "People are scared nowadays because of the more frequent tax checks and the cross referencing the tax agency can do with bank accounts, earnings and so on… They are worried they will be found out."

That has led many owners to try to sell their treasured Ferraris in an attempt to lower their profile. Some have even traded in their beloved cars for – gulp – Fiats. Another told the Corriere della Sera newspaper that he now drives around with his tax returns.

The Ferrari owner interviewed by ABC News said so many were selling their used Ferraris, the demand to buy the cars back was dropping – and their value had decreased at least 20 percent.

"Many are trying to sell their luxury cars but they can't get the cost they paid for them," he said.

Changing a culture

Avoiding taxes is nothing new in Italy. Italians commonly encounter professionals who offer discounts to those who pay in cash or shops that do not issue receipts -- all attempts to pay less tax.

Tax authorities have attempted to find tax cheats in the past. In 2010, for example, they went after singer Vasco Rossi for creating a fictitious charter company to hide the true cost of his yacht. But this government's new austerity measures, which include laws that make it harder to hide wealth, are an attempt to force Italians to think differently about their taxes.

A widely reported tax blitz in January on Cortina D'Ampezzo, the winter playground for the rich and famous, received widespread support from Italians. Tax authorities looked into the owners of 133 Lamborghinis, Ferraris, and other luxury cars and found nearly a third of the owners declared incomes of less than $30,000 per year – a laughable amount, considering not only the cost of their cars but the $8.95/gallon cost of gasoline.

The government has released a commercial that flips between slides of "parasites" with their Latin names underneath. Pictures of wood, fish and dog parasites begin the commercial, and the last image is of a man's face with the name "parasite of society, tax evader" written underneath.

"The culture of Italians is changing," Attilio Befera, the Italian tax agency's director, told reporters recently. "Fiscal evasion is seen as a bad thing for everyone, not a cunning habit anymore."

A leading stationary chain, he said, was selling more tax receipt rolls and booklets, and a growing number of Italians were demanding receipts.

The government has given the tax authority greater latitude: it can now access bank accounts at any time, not just when Italians were under investigation for undeclared taxes; and it uses more software and data systems that allow cross referencing bills and bank accounts with a person's annual spending habits.

Critics of the crackdown say it has been tried before and is ineffective against a massive black market that has, well, always existed in Italy. The total amount of non-taxed funds in Italy is estimated to be between $150 and $190 billion (although much of that is related to the mafia, not traditional tax cheats). The black market is as much as 17 percent of GDP, according to the national statistics agency.

It's not clear whether, as Befera insists, the crackdown will change Italians' feelings about paying taxes. He cites polls in which an overwhelming majority of Italians supported the police checks on luxury cars and high-profile businesses as a positive sign.

Of course, most people would say they want everyone else to pay more in taxes. As Befera's deputy, Marco di Capua, recently told Reuters: "Everyone's against tax evasion -- when it's someone else doing it."

As for the Ferrari owner, he admitted that his beloved car, which he has owned for more than 10 years, was a "magnet" for tax police. And he admitted that he was keeping it in the garage for now – though not because of the tax checks.

With the recent hikes in gasoline prices, he said, "it's just too expensive to drive."

UPDATE: Herbalife Shares Plunge After Einhorn Questions During 1Q Call

May 1, 2012, 3:55 p.m. ET

- Hedge-fund manager David Einhorn asks questions during first-quarter conference call

-- Questions are about disclosures, sales sources and distributor rewards

-- Einhorn is known for bearish bets on companies he views as overvalued

(Adds analyst comments in the fourth, fifth and seventh paragraphs and context about Herbalife and Einhorn to sixth, eighth, ninth and 19th paragraphs; updates share movement in second paragraph)

NEW YORK (Dow Jones)--Herbalife Ltd. (HLF) shares plunged Tuesday after U.S. hedge-fund manager David Einhorn sought details from the weight-loss-products company about its disclosures, sales sources and distributor rewards as it reported its first-quarter results.

Shares were ...

http://online.wsj.com/article/BT-CO-20120501-714480.html




Herbalife shares fall after rebounding Wednesday


May 17, 2012 2:30 PM

Shares of Herbalife Ltd. declined Thursday as the stock continued to fluctuate on concerns it may become a target for short-sellers.

THE BIG PICTURE: Shares of Herbalife have fallen 40 percent this month after hedge fund manager David Einhorn criticized the company. During Herbalife's first-quarter investor call on May 1, Einhorn asked how much of the Los Angeles company's products are sold to consumers who aren't distributors, and he asked why Herbalife did not disclose a breakdown of difference types of distributors as it usually does.

Caris & Co. analyst Linda Bolton Weiser said Einhorn is known for shorting stocks, and some investors were concerned he would propose taking a short position on Herbalife shares at an investor conference on Wednesday. When that did not happen, the stock jumped 16.7 percent.

In a note to clients, Weiser upgraded Herbalife shares to "Buy" from "Average" and raised her price target to $86 per share from $39. She wrote that Herbalife's business model works and its sales in local currency are improving. She wrote that the stock is trading well below its annual highs.

Wedbush analyst Rommel Dionisio maintained an "Outperform" rating, saying he is confident in the company's business model despite Einhorn's questions.

"We believe this recent sharp selloff represents an attractive buying opportunity for investors to re-enter a blue chip name such as Herbalife," he wrote.

On May 3, Herbalife announced it would buy back $427.9 million of its own shares.

SHARE ACTION: Herbalife stock fell $4.35, or 8.8 percent, to $45.16 in afternoon trading. The shares reached a 52-week high of $73 on April 23, but between May 1 and Wednesday the shares dropped 39.7 percent.







http://www.cbsnews.com/8301-505245_162-57436491/herbalife-shares-fall-after-rebounding-wednesday/

Lamborghini Gallardo crash wrecks driver’s reputation in suburban Chicago intersection

By Justin Hyde | Motoramic – Tue, May 15, 2012 10:24 AM EDT

 

It's a setup, right? No one would just happen to pull up behind a $200,000 Lamborghini Gallardo somewhere in the sprawling Chicago suburbs with a video camera running only to have the Gallardo driver get sudden onset Lambo brain and attempt to drift through the intersection, instead swapping paint with a Honda CR-V andMercury Grand Marquis. That's going to leave a mark on their wallet.

Apparently captured at an intersection in Wheeling, Ill., there's no other information known about the driver of the Gallardo, other than their new-found knowledge of how the V-10 interacts with the all-wheel-drive system on a slow corner. But the videographer did capture the driver of his own Pontiac making one and possibly two illegal U-turns in the road while recording the aftermath. However much money they may get from a few ads on YouTube won't make up for the cost of a traffic ticket and auto insurance hike.

http://autos.yahoo.com/blogs/motoramic/lamborghini-gallardo-crash-wrecks-driver-reputation-suburban-chicago-142429294.html

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Wiping Out $90,000 in Student Loans in 7 Months

By Josh Mitchell | The Wall Street Journal – Fri, May 18, 2012 3:42 PM EDT

Economists are increasingly worried that many young Americans will spend coming years buried under student debt. Joe Mihalic was determined not to be one of them.

Faced with $90,000 in student debt from his days at Harvard Business School, Mihalic vowed last August to eliminate every penny by this summer. He did — three months early.

The 29-year-old from Austin, Texas, is now becoming an Internet celebrity of sorts as financial advisers and young Americans link to his blog, NoMoreHarvardDebt.com, which had 180,000 hits as of Thursday morning. His story is touching a nerve at a time when young Americans are more indebted than ever.

So how did he cut through $90,000 in seven months? It helps to have a low-six-figure salary, as Mihalic does working for Dell Inc. But he also recommends getting roommates, a second job (in his case, landscaping), forgoing all restaurant dining (even McDonald’s), selling all unnecessary items around the house — and getting a flask.

Mihalic said he spent months taking a flask of liquor to bars so he could continue to go out drinking with friends without running up a tab. (Be warned: this is typically illegal.) Instead of the movies, he took dates out hiking, or for bagels and coffee. He ate protein bars packed from home and walked several miles to the city, to save a few bucks on transportation, during a trip to Michigan. He got two roommates to rent out his house.

Mihalic also took steps that financial advisers typically say are a no-no: He liquidated his individual retirement account, drawing a tax penalty, and stopped contributing to his 401(k), even though his employer offers a matching contribution.

“My mentality was I want to be done with these student loans as quick as possible,” Mr. Mihalic says in a phone interview, adding: “It was an emotional decision.”

He made his last student-debt payment six weeks ago. He said he saved roughly $40,000 in interest that he would have paid had he stayed on the 15-year schedule for repayment of his loans.

He says he learned other lessons, too.

“The flask thing, it’s kind of demeaning,” he says. “The funny thing is that girls weren’t really sketched out by it…They did laugh, and I could still get their phone number. It taught me a lot — you don’t have to be this flashy dude, buying drinks.”

http://finance.yahoo.com/news/wiping-out--90-000-in-student-loans-in-7-months.html

Young heiresses spend $155 million on homes

By Candace Jackson and Lauren A.E. Schuker, WSJ.com

May 18, 2012

Some kids cost a fortune.

In a real estate shopping spree of epic proportions, the daughters of Formula 1 Racing boss Bernie Ecclestone have snapped up hundreds of millions of dollars worth of high-profile properties in the past 18 months. Tamara, 27, bought a 16,000-square-foot historic brick home across the road from Kensington Palace, where Prince William and Duchess Catherine will soon take up residence, for about $70 million early last year. Her 23-year-old sister Petra paid $85 million for a 57,000-square-foot Los Angeles mansion a few months later. Known as "the Manor," the 14-bedroom, 27-bathroom home was built by Candy Spelling and her late TV producer husband Aaron Spelling.

The sisters are among a small number of ultra-wealthy, young people who are making waves at the very top of the real estate market. A trust linked to Ekaterina Rybolovlev, the 22-year-old daughter of Russian fertilizer billionaire Dmitry Rybolovlev, bought a four-bedroom penthouse in New York for $88 million earlier this year. Another young Russian, Anna Anissimova, the 27-year-old actress daughter of Vasily Anissimov, who made his billions in iron ore and aluminum, recently put her New York apartment on the market for $50 million. (She paid $9.9 million for the apartment in 2004, when she was 19.) Megan Ellison, the 26-year-old daughter of software mogul and Oracle CEO Larry Ellison, bought three homes in the Hollywood Hills over the last few years, one of which she put on the market recently for $15.5 million.

Still, it was Petra's purchase of the Spelling mansion that "changed the perception of who a buyer could be," said Rick Hilton, who represented both Ms. Stunt and Ms. Spelling in the sale, noting that he now looks at younger buyers much more seriously. He added that Petra's desire to buy such a statement home surprised him, considering her age. "At first, I showed her several properties but they weren't grand enough," he remembered, including a 36,000-square-foot French-style mansion on Sunset Boulevard now listed for $49.5 million. "When those earlier homes didn't excite her, I saw very quickly that…she wanted the finest estate available, and that's what she got."

The Ecclestone sisters exemplify the way many of the ultra-wealthy, and ultra-young, buy real estate. They often make up their minds quickly. They like to customize their homes to their highly specific tastes, on a quick turnaround with few expenses spared. Petra Stunt, who married entrepreneur James Stunt last August, negotiated the deal to buy her Los Angeles home the week after she saw it. And she recently moved in following an extensive 12-week renovation, an unusually short turnaround for a job of that magnitude. Ms. Ecclestone's Kensington home is also being finished on an accelerated timetable, according to the builder, about half the typical time frame for a project of that scale.

Though the sisters are sometimes portrayed in the British press as rivals, Ms. Ecclestone said they are best friends who speak on the phone or text message several times a day; the letter "P" in script is tattooed on her wrist for Petra. Ms. Stunt surprised her sister when she called from Los Angeles, where she was vacationing with her then-fiancé last spring for Easter, to say she was planning to buy a house there. "When she has something in mind that she wants, she just goes for it," said Ms. Ecclestone. "I'm the same way."

Ms. Ecclestone is also planning to convert a London pub her father purchased for her into a private home, which she estimates she'll market for roughly $16 million. Ms. Stunt is separately in the midst of renovating a four-story home in London's posh Chelsea neighborhood, which she purchased around the end 2010 for about $90 million. Real estate veterans said it's somewhat unusual for that number of purchases to happen in the same family in such a compressed time frame. "Most high-profile, uber wealthy people prefer to remain under the radar and would shy away from such purchases in bulk," said I. Dolly Lenz, a luxury real-estate agent in New York.

Ms. Ecclestone now lives about a block from where she and her sister grew up in Chelsea. Her current home, which she plans to sell when her new place is ready, is decorated with photos of the family on ski vacations and at formal events, artwork by Damien Hirst and Anish Kapoor and a sculpture of a Hermes Birkin bag. A bedroom she's converted into a closet is filled with her collection of Ugg boots and Louboutin heels. Wearing Lululemon yoga pants and a fitted hoodie, Ms. Ecclestone sat in her living room, overlooking an outdoor lap pool, and explained that she sees their real estate holdings as smart purchases. "I think London [property] is a really good investment," she said. "There's no bank in the world that can give you that return."

In shopping for real estate, Ms. Eccelstone said she keeps resale value in mind and that a premium location and security are paramount considerations. Her guiding philosophy is to buy "the best property I could find."

After looking at many houses, Ms. Ecclestone said she immediately knew she wanted the home in Kensington Palace Gardens. The estate agent who brokered the deal, Louise Hewlett, said her client understood that the purchase price was "a large sum of money" but that by refurbishing the home, "the value would go up tremendously." She added that her client has already gotten two offers of well-above what she paid.

Tim Wright, an estate agent with Knight Frank who was not involved in the deal, describes the location as "the most exclusive street in London, bar none." Mr. Wright said with only 30 homes on the block, many of them embassies or ambassadorial residences, renovated properties there tend to sell quickly.

Sayed Bukhari, owner of the building, construction and design company that Ms. Stunt retained to work on her Chelsea home, said she's already received several offers in excess of $125 million on it. "When she first bought the house, people were really skeptical about whether it was a good investment," he said. "She has proven everyone completely wrong." Real estate brokers in L.A., however, are less sure Ms. Stunt's purchase there, which included a pricey renovation, will turn out to be such a sound investment. "She would probably need to get a $100 million offer on the home just to break even," said Stephen Shapiro, a top luxury broker. "And there aren't too many buyers looking in that range in L.A.… so far, she's the only one." When it comes to selling a property in the $100 million range in L.A., he added, "You are kind of stuck waiting for the next Petra Ecclestone."

One thing the sisters' newest homes share is Gavin Brodin, a Los Angeles-based designer-builder whose past projects have included homes for Kate Beckinsale and Sylvester Stallone. He met Ms. Ecclestone about a year and a half ago poolside at the resort where they were both vacationing in Cabo San Lucas, Mexico, introduced by a mutual friend. Since then, he's been working 15- to 18-hour days to complete both sisters' homes on an accelerated timetable. For her second home in London, however, Ms. Stunt hired design firm Candy & Candy, which caters to Russian oligarchs and celebrities such as Gwyneth Paltrow.

Built in 1991, Ms. Stunt's Los Angeles home sits on five acres in Holmby Hills and has parking for 100 cars. Ms. Stunt's renovation was completed in less than three months with 500 workers. The closet of the master suite—which at 7,000 square feet has its own kitchen and living room—is two levels, connected by a pair of staircases.

Ms. Ecclestone, who lives with her private investor boyfriend Omar Khyami and their six dogs, said she plans to move into her house in Kensington in October. Her renovation and expansion of the historic mansion requires about a dozen managers and 80 construction workers on site five days a week. The exclusivity of the gated block means only large construction truck is allowed on the property each day, creating a further challenge for workers, who are also required to be off-site by 5 p.m. every day.

Designer Mr. Brodin relocated to London to oversee the project last year. "It's nonstop," he said, sitting in a temporary office strewn with planning documents.

A 45-foot-deep hole in the ground will become a 4,000-square-foot, two-story underground addition with a pool with a bar, spa and entertainment center with a nightclub and bowling alley. A multi-room master suite will have separate cocktail and Champagne bars. Mr. Brodin had a staffer travel to Brazil to purchase a giant slab of smoke quartz crystal for the master suite's bathtub. When done, the home will be 20,000 square feet. Everything in it—from the cutlery to the seats in the 3D movie theater—will be custom-designed.

"I'm definitely, 'Go big or go home,'" Ms. Ecclestone said.

The son of a fishing trawler captain who quit school to race motorcycles, Bernie Ecclestone built his fortune from auto sales, property and the transformation of Formula 1 into one of the world's most popular sports. He married Slavica Radic, a Croatian fashion model, in 1985 and said he tried to instill in his daughters a sense of what money was worth.

Mr. Ecclestone and his wife divorced in 2009, and he recently became engaged to a 35-year-old Brazilian named Fabiana Flosi. Mr. Ecclestone said he has a close relationship with his daughters but did not advise them on their most recent real estate purchases. With their mother, the sisters are beneficiaries of an off-shore family trust known as Bambino Holdings, of which Mr. Ecclestone said he has no oversight. "I can't control them at all," he said. Along with the trustees, their mother "has been looking after them. And it's right for a mother to do that."

Mr. Ecclestone, whose daughters are often photographed wearing stiletto heels, towering over his 5-foot-3-inch frame, said that by giving them money now, "they will want to be independent and make their own money as they spend it." "I think it's better they make their own mistakes in the world and they'll learn quicker," he said, adding that he's proud of his daughters' real estate investments, made independently from him. He said he did not pay for Ms. Stunt's London home. Public records show that Ms. Stunt borrowed the bulk of the money from her mother—$82.4 million—to pay for her $85 million mansion in LA.

Neither sister graduated from university. After attending briefly, Ms. Ecclestone got a job at an Armani retail store, which she quit after six months. "I found it shocking how rude people were," she said. She later worked as a TV host and model and is launching her own line of luxury hair products and lingerie.

At 19, Ms. Stunt launched a menswear label but folded it quickly thereafter. Earlier this year, she launched a line of high-end clutch purses with names like High Maintenance, Clutch Me and Morning After. Friends describe Ms. Stunt, the younger sister, as the shyer of the two, but more free-spirited. "She's quite airy-fairy and likes to make her mind up last-minute," said Ms. Ecclestone. Ms. Stunt initially agreed to an interview but canceled; her publicist said one of her dogs got sick.

The sisters attract their share of criticism. In London, construction to renovate Ms. Stunt's Chelsea home, including installing a 25-foot wide aquarium and digging down dozens of feet to create a 10,000-square-foot basement with an indoor pool, squash court, gym, beauty salon and spa, has sparked ire. Terence Bendixson, honorary secretary of planning for the Chelsea Society, a community organization, said Ms. Stunt's London home was turning into "a neo-Georgian pastiche of the kind spec builders put on Bishop's Avenue for people with lots of money and no taste."

Isla Baring, a philanthropist who lives nearby, said the construction is so disruptive that she and several neighbors sent Mr. Ecclestone a letter last month asking for compensation. "We suggested that he give us some money rather than throwing it all away on his spoiled daughter so she can live in this enormous monster of a house," she said. Mr. Ecclestone said he replied to the letter saying that the home was not under his ownership. "They were passionate to get some money any way they could," he said.

Last year Ms. Ecclestone starred in a reality program about her life called "Billion $$ Girl." One episode depicted her taking her dogs to Harrod's for facials and pedicures. Another shows her debating cancelling a meeting because she woke up with a pimple on her face.

Her participation in the show, in the midst of a recession, drew criticism from many, including her father. Mr. Ecclestone said he could barely make it through one episode. "I spoke to her before and said… 'They're never going to show you in a good light,' " he said. "She was stupid to do it."

Ms. Ecclestone took the criticisms in stride. "It's like water off a duck's back," she said.

She said her true passions don't lie in property but in creating a luxury brand and modeling. On a recent afternoon after a pilates class, she climbed into a chauffeured Land Rover and headed to a sushi restaurant. At lunch, she ran into a friend who was dining with the actor Tom Hardy, who plays the villain in the upcoming Batman movie, "Dark Knight Rises."

Ms. Ecclestone said the attention and speculation doesn't bother her. "I kind of feel like people [in the U.K.] want you to apologize for what you have," she said. "Petra and I are like, 'Why should we have to apologize that our father's this amazing businessman who gave us this great life?'"

http://realestate.yahoo.com/promo/young-heiresses-spend-155-million-on-homes.html