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The Art of the Turnaround - Wilbur Ross Review of Low P/E Stocks

December 13, 2013 | About:
Sally Jones

Sally Jones

49 followers
The career of Guru Wilbur Ross, the global restructure expert, is vividly painted with company turnarounds too

numerous to mention. Indeed, this art lover, whose art collection is valued at around $150 million, has a rare gift for transforming failing companies that transcends ordinary business and taps into the creative realm. Like the artists that he loves – he owns 25 paintings by Magritte - Guru Ross has vision. He sees not only what is but also what could be. Restructuring is his medium and it pays well. According to Forbes, this self-made billionaire has a net worth of $2.6 billion as of Sept. 2013. Beginning in 1976, Wilbur Ross led the worldwide bankruptcy advisory practice at Rothschild Inc. for more than 20 years. He has restructured more than $200 billion in liabilities worldwide.

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At Invesco Private Capital, WL Ross & Co. LLC is a private equity firm and an international turnaround group, founded by Wilbur Ross. A graduate of Yale and Harvard, Wilbur L. Ross, Jr. has a global reputation for restructuring distressed companies and winning big. Investing in failed companies and leveraged buyouts, he typically deals in coal, steel, telecommunications, foreign investment and textiles. Invesco was founded in 2000, by New Jersey-born Wilbur Ross, with $440 million in investor commitments. Invesco is now one of the world's largest and most diversified independent investment management firms, with a singular focus on investment management.

WL Ross & Co. LLC invests in and restructures distressed companies with the objective of transforming them into world-class enterprises. The company has over $7 billion in assets under management with investments across North America, South America, Europe, and Asia.

This month, Invesco Ltd. (IVZ) reported that foreign exchange increased its assets under management by $1.1 billion. Invesco’s preliminary average total AUM for the quarter (through November 30) was reported at $757.2 billion. The preliminary month-end AUM of $767.3 billion, reflected an increase of 0.4%, month-over-month, according to the company website.

The Invesco portfolio currently lists 10 stocks, none of them new, and a total value of $942 million with a quarter-over-quarter turnover of 0%.

The stocks bought by Wilbur Ross averaged a 12-month return of 30.75%.

As of the third quarter of 2013, the Invesco portfolio is weighted with top sectors: financial services at 72.3%, energy at 22.5% and technology at 4.6.

Here’s a look at the three lowest P/E stocks in the Invesco portfolio, as of the third quarter of 2013.

Cascade Bancorp (CACB) P/E: 4.80

Weightings: 7.1%

Current Shares: 11,468,750

Value: $66,863,000

Down 3% over 12 months, Cascade Bancorp has a market cap of $253.6 million; its shares were traded at around $5.22 with and P/B ratio of 1.30. The company does not pay a dividend.

Formed in 1990, Cascade Bancorp is a bank holding company that conducts business activities through its wholly-owned subsidiary, Bank of the Cascades. The bank operates more than 30 branches serving communities in Central, Southwest and Northwest Oregon, as well as in the greater Boise, Idaho area.

GuruFocus currently ranks CACB with one star out of five stars for business predictability.

Guru Action: As of Sept. 30, 2013, Wilbur Ross held 11,468,750 shares at an average price of $6.16 per share, taking a loss of 15.3%.

In the first quarter of 2011, he made a new buy of 11,468,750 shares at an average price of $8.84 per share, taking a loss of 41%.

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Assured Guaranty Ltd. (AGO) P/E: 7.70

Weightings: 29.5%

Current Shares: 14,842,488

Value: $278,297,000

Up 57% over 12 months, Assured Guaranty Ltd. has a market cap of $4 billion; its shares were traded at around $22.15 with and P/B ratio of 0.80. The dividend yield is 1.80%.

A Bermuda-based holding company incorporated in 2003, Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to the U.S and international public finance, infrastructure and structured finance markets. The company applies its credit underwriting judgment, risk management skills and capital markets experience to offer insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments, including scheduled interest and principal payments.

The company is not rated for business predictability.

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Guru Action: As of Sept. 30, 2013, Wilbur Ross held 14,842,488 shares at an average price of $21.15 per share, for a gain of 5.1%.

Over six quarters, Wilbur Ross has averaged a gain of 17% buying 18,320,870 shares at an average price of $18.93 per share. Selling, he gained 2% on 4,992,882 shares at an average price of $21.79 per share.



BankUnited Inc. (BKU) P/E: 14.80

Weightings: 27.1%

Current Shares: 8,189,631

Value: $255,435,000

Up 39% over 12 months, BankUnited Inc. has a market cap of $3.22 billion; its shares were traded at around $31.82 with and P/B ratio of 1.70. The dividend yield is 2.60%.

BankUnited Inc. is a savings and loan holding company with two wholly-owned subsidiaries in Florida: BankUnited, an independent depository institution, and BankUnited Investment Services Inc., an insurance agency that provides comprehensive wealth management products and financial planning services.

The company is not currently rated for business predictability.

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Guru Action: As of Sept. 30, 2013, Wilbur Ross held 8,189,631 shares at an average price of $29.74 per share, for a gain of 6.1%.

Over three quarters, Wilbur Ross has averaged a gain of 10% buying 13,721,131 shares at an average price of $28.58 per share. Selling, he gained 2o% on 5,531,500 shares at an average price of $26.32 per share.

Here is the complete portfolio of Wilbur Ross.



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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.2/5 (5 votes)

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