Billionaire Wilbur Ross Is Against Brexit; Here Are His Fund’s Top 13F Holdings

Though the fears of a Brexit have subsidized a little bit in the last few days, most sophisticated  investors are still refraining placing any large bets till the UK electorate makes its final decision on June 23. One such investor, restructuring maverick billionaire Wilbur Ross is of the opinion that if the vote turns out to be in the favor of the UK leaving the European Union, it will be a ‘financial suicide’ for British homeowners. While speaking on CNBC recently, Mr. Ross explained why he thinks Brexit will be disastrous for the UK economy. According to him, the foreign direct investments in the UK, a bulk of which comes from fellow EU countries, will be negatively impacted if Brexit becomes a reality and the UK’s export will also see a large decline, because 45% of it goes to other EU nations. He also highlighted how tough it will be for the United Kingdom to leave the European Union:

“There, in fact, is no mechanism in the EU constitution for an exit. This is totally unchartered water and I think to have to negotiate treaties that you hope will benefit you with people you just told to go shove off  [is] not going to be an easy exercise. There will be volatility and fright throughout the United Kingdom.”

Moreover, according to CNBC, Mr. Ross’ company, WL Ross & Co., is engaged in mortgage lending in the UK and the investor believes that in case of a ‘Brexit’  the home prices would collapse. In this article, we will take a look at the top five US equity holdings of Invesco Private Capital, a subsidiary of investment giant Invesco Ltd. (NYSE:IVZ) which owns WL Ross & Co.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

#5 Xenon Pharmaceuticals Inc (NASDAQ:XENE)

– Shares Owned by Invesco Private Capital (as of March 31): 436,384

– Value of Holding (as of March 31): $3.05 million

Xenon Pharmaceuticals Inc (NASDAQ:XENE) continued to remain Invesco Private Capital’s fifth largest equity holdings at the end of the first quarter with the fund making no changes to its stake in the company during the company. The biopharmaceutical company has lost almost half of its market capitalization in the last 52 weeks and is currently trading down by around 20% year-to-date. For its fiscal 2016 first quarter, Xenon Pharmaceuticals Inc (NASDAQ:XENE) reported a per share loss of $0.23 on revenue of $0.6 million versus analysts’ expectation of a per share loss of $0.21 on revenue of $3.3 million. Following its earnings release, on May 11, analysts at Jefferies Group reiterated their ‘Buy’ rating and $13 price target on the stock, which represents a potential upside of over 100% from the current trading price of the stock.

#4 EXCO Resources Inc (NYSE:XCO)

– Shares Owned by Invesco Private Capital (as of March 31): 51.10 million

– Value of Holding (as of March 31): $50.55 million

EXCO Resources Inc (NYSE:XCO) has been the best-performing stock among Invesco Private Capital’s top five equity holdings this year, registering a gain of 25.7% so far in 2016. While Invesco kept its stake in the company constant during the first quarter, billionaire David E. Shaw‘s firm D.E. Shaw increased it by 185% to 3.36 million shares during that period. Even after accounting for the gains that the oil and natural gas company has made this year on the back of the rally in crude oil  prices, its stock is still down almost 90% in the last five years. Some analysts who track the stock feel that since it is trading at an excessively cheap valuation, pricing the company at nearly bankruptcy levels, it can see significant upside even in the scenario where the company manages to just survive and reduce its debt burden. On May 24,  EXCO Resources Inc (NYSE:XCO) announced that for its fiscal year 2016,  it will be reducing its capital spending budget by 69% year-over-year to $89 million and also revealed that it has reduced its net debt to $1.1 billion as of March 2016 from $1.5 billion on September 30, 2015.

#3 Cascade Bancorp (NASDAQ:CACB)

– Shares Owned by Invesco Private Capital (as of March 31): 11.47 million

– Value of Holding (as of March 31): $65.48 million

Moving on, Invesco Private Capital kept its stake in Cascade Bancorp (NASDAQ:CACB) unchanged during the first quarter. One of the hedge funds that initiated a stake in the bank holding company during that time was William Black’s Consector Capital, which purchased 132,812 shares. In April, Cascade Bancorp (NASDAQ:CACB) announced that it entered into a definitive agreement to acquire Prime Pacific Bank, in an all-stock deal. The company expects this deal to be 5% accretive to its earnings in 2017 with no revenue synergies. A day after this announcement, the company reported its fiscal 2016 first quarter numbers, which were slightly better than the consensus estimate. While analysts had projected the company to report EPS of $0.06 on revenue of $25.58 million, Cascade Bancorp reported EPS of $0.06 on revenue of $27.62 million for the quarter.

#2 Sun Bancorp, Inc. /NJ (NASDAQ:SNBC)

– Shares Owned by Invesco Private Capital (as of March 31): 4.25 million

– Value of Holding (as of March 31): $88.14 million

Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) lost 90% of its market value in the period between 2004 and 2011. However, its stock has been on a slow and steady rise ever since the end of that bear run and recently touched the $22 mark after spending more than five years trading below it. On May 2, Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) reported its fiscal 2016 first quarter results. While the EPS of $0.04 it declared for the quarter missed analysts’ estimates by $0.01, the company’s revenue of $17.65 million managed to beat analysts’ revenue projections by $2.33 million. Like Invesco Private Capital, Anton Schutz‘s Mendon Capital Advisors also kept its stake in Sun Bancorp unchanged during the first quarter and continued to own 143,538 shares of the company at the end of March.

#1 Navigator Holdings Ltd (NYSE:NVGS)

– Shares Owned by Invesco Private Capital (as of March 31): 21.86 million

– Value of Holding (as of March 31): $353.1 million

UK-headquarted Navigator Holdings Ltd (NYSE:NVGS) remained the largest equity holding of Invesco Private Capital ever since the firm initiated its stake in the company during the last quarter of 2013. Similar to the other stocks mentioned previously, the fund also left its stake in Navigator Holdings unchanged during the first quarter and the position amassed over 60% of the fund’s equity portfolio at the end of March. Since the beginning of 2014, shares of the operator of a fleet of liquefied gas carriers  have lost over 6% of their value, but Invesco Private Capital has kept its stake largely unchanged, only bringing it down marginally during a few quarters. Due to the rally in natural gas prices earlier this year, Navigator Holdings Ltd (NYSE:NVGS)’s stock saw a rally in January and February. However, it has given up all those gains, and more, since then and now trades down 20% year-to-date.  On April 20, analysts at Stifel Nicolaus reiterated their ‘Buy’ rating on the stock, but lowered their price target on it to $25 from $28, which represents a potential upside of almost 130% from the stock’s last trading price.

Disclosure: None