If it's not Warren Buffett buying batteries or a car dealership, it's Carl Icahn pushing for change or Bill Ackman insisting on a corporate merger. The media fixates on the headline-grabbing investors as they should -- those are the stories that sell newspapers and give media types something to talk about.
But there are other very shrewd investors, who you hardly ever hear about, but who are also plying their investment trade with enormous success. One of those investors is Wilbur Ross. Perhaps, in my opinion, no other investor is as underrated as Ross.
Ross has focused his craft on creating opportunity out of restructuring troubled companies or looking into secularly challenged industries for situations that can be reversed over time. Ross is a true contrarian investor in the way it counts. He finds opportunities in stocks that others hate and then does a deep dive into the information. If he's still convinced in the opportunity, he bets big.
And he's done it over and over again in his career with steel, energy, finance and other companies. In an industry where a lot of activists are in the business of turning companies around, Ross has the distinction of being the only individual who is both a member of the Private Equity Hall of Fame and the Turnaround Management Association Hall of Fame.
Ross has not been buying much lately, which I find interesting since merger mania is active once again on Wall Street. What he does own is classic Ross -- out-of-favor situations that appear especially challenged today. Energy exploration company Exco Resources (XCO) is one. Ross owns more than 50 million shares of Exco and his purchase price was significantly higher than the current price of $3 a share.
Recent purchases by Ross include Navigator Holdings (NVGS), a $1.3 billion shipper of gas and other chemicals. The company is based in the U.K. The shares are trading for $23 but they were trading as high as $60 earlier this year. Earlier in the month, the company reported encouraging third-quarter earnings results.
Another recent Ross buy was Talmer Bancorp (TLMR), which is a billion-dollar bank based in Troy, Mich. Michigan is a distressed state so it is easy to see why Ross would want exposure there. And Talmer is performing very well. Its average return on assets exceeds 1% while its average return on equity exceeds 10%. These are ratios that most banks in today's Dodd-Frank world would drool over. At $14 a share, Talmer trades at a 40% premium to book value, which is a very reasonable multiple given the profitability metrics.
Investment headlines are what everybody reads. But the best opportunities can often be found in those situations that you don't hear much about.
