This article is the first of a series that provides ongoing
analysis of the changes made to Wilbur Ross’s US stock portfolio on a quarterly
basis. The WL Ross & Co unit of Invesco is a specialized outfit that looks
to invest in and turnaround financially distressed companies. WL Ross & Co
was established in 2000 and in the mid-2000s bought several bankrupt steel
companies to form International Steel Group. After executing a turnaround, ISG
was sold to Arcelor Mittal in 2005 for a $2.5B profit. More recently, Wilbur
Ross along with Fairfax Financial Holdings took a large stake in Bank of
Ireland, thereby “saving” the company from nationalization.
The spreadsheet below highlights changes to Ross's US stock
holdings in Q1 2012:
The portfolio remained largely unchanged with a few minor
adjustments. Also, new stakes were established on Bioscrip Inc (BIOS), Delta
Air Lines (DAL), and Key Energy Resources (KEG). However, the stakes do not
indicate a bullish bias – combined, they accounted for only around 0.5% of the
portfolio and so the stakes are insignificant.
Bullish: The big 20%
stakes in Assured Guaranty (AGO) and Bankunited Inc (BKU) along with the huge
30% stake in Bank of Ireland returned well into the double-digits. They were
held steady indicating a clear bullish bias. Exco Resources (XCO) was a large ~21%
stake as of Q4 2011. The stake was increased marginally during the quarter in the
face of a sharp correction. The increase in stake indicates a clear bullish
bias. Wilbur Ross is on record saying natural gas is a good intermediate step for
the United States between dirty fossil fuels (coal and oil) and renewable
energy – it should help with the balance of payment and reduce the dependency
on Arab nations for fuel.
Bearish: The 0.5% stake in United Airlines (UAL) was reduced
by over 35% during the quarter indicating a mild bearish bias.
