Billionaire Wilbur Ross’ Top Stock Picks and Notable Moves

Billionaire Wilbur L. Ross Jr., known as a connoisseur of failed companies, has built his net worth betting on distressed assets. The billionaire distressed asset investor serves as the Chairman and Chief Strategy Officer of deep value-oriented private equity firm WL Ross & Company, a wholly-owned subsidiary of Invesco Ltd. (NYSE:IVZ) and part of Invesco Private Capital. The New York-based investment firm primarily seeks out to provide “high-touch” capital and operations solutions in transitional situations where Mr. Ross and his team can influence the outcome. Wilbur Ross believes in the set of value investing principles set out by Benjamin Graham and David Dodd, so retail investor should definitely have a look at his firm’s pool of holdings. For that reason, this article will discuss the top three holdings within Mr. Ross’ portfolio, as well as lay out two noteworthy moves executed during the first quarter of 2016. His top three equity holdings did not suffer any changes during the quarter.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Wilbur Ross Sold Out GoPro Inc. (NASDAQ:GPRO) Stake

– Number of shares owned by WL Ross & Co. as of March 31: 0

– Value of WL Ross & Co.’s holding as of March 31: 0

Billionaire Wilbur Ross and his team sold out a 43,357-share stake in GoPro Inc. (NASDAQ:GPRO) during the first quarter of the year. The position was acquired during the final quarter of 2015, so the move isn’t quite characteristic to the long-term view principle advocated by most value investors. The manufacturer of action cameras has seen its market capitalization plummet by 48% since the beginning of the year, partially owing to mixed first-quarter earnings results and postponement of the launch of its flying-camera drone, called Karma. GoPro’s first product for the consumer drone market was initially scheduled for launch at the end of the second quarter, but the unveiling has been delayed closer to the holiday season. The company’s first-quarter revenue was $183.54 million, down drastically from $363.11 million recorded a year ago. The number of hedge funds from our system with stakes in GoPro dropped to 16 from 18 during the March quarter. Cliff Asness’ AQR Capital Management LLC owns 1.98 million shares of GoPro Inc. (NASDAQ:GPRO) as of March 31.

Mr. Ross Reduced Exposure to Etsy Inc. (NASDAQ:ETSY)

– Number of shares owned by WL Ross & Co. as of March 31: 35,400

– Value of WL Ross & Co.’s holding as of March 31: $308,000

WL Ross & Co. trimmed its stake in Etsy Inc. (NASDAQ:ETSY) by 120,071 shares during the first three months of 2016, ending the March quarter with 35,400 shares valued at $308,000. The Etsy stake was yet another position acquired by Mr. Ross during the final quarter of 2015. The shares of the marketplace of hand-crafted goods are up 3% since the start of 2016, but they continue to trade significantly below their initial public offering (IPO) price of $16.00. Earlier this year, the New York-based company posted the first quarterly profit since becoming a public company in April 2015, but analysts and investors are still concerned over the company’s fast-slowing growth and decreasing number of active sellers and buyers. Etsy’s gross merchandise sales growth rate has been decelerating in recent quarters. The GMS figure rose 18% year-on-year in the first quarter of 2016 to $629.85 million, after recording a growth rate of 21% in the fourth quarter of 2015. Tiger Global Management LLC, founded by Chase Coleman, has 11.09 million shares of Etsy Inc. (NASDAQ:ETSY) in its portfolio as of the end of March.

WL Ross & Co.’s Third-Largest Position: Cascade Bancorp (NASDAQ:CACB)

– Number of shares owned by WL Ross & Co. as of March 31: 11.47 Million

– Value of WL Ross & Co.’s holding as of March 31: $65.49 Million

The billionaire distressed asset investor and his firm held their stake in Cascade Bancorp (NASDAQ:CACB) unchanged during the January-to-March quarter at 11.47 million shares. The quarter-end stake was worth $65.49 million and accounted for 11.7% of WL Ross & Co.’s entire portfolio. The holding company for Bank of the Cascades has seen the share price of its stock drop 7% since the beginning of 2016. In early March, Cascade Bancorp finalized the acquisition of 12 Oregon branch locations and three Washington branch locations from Bank of America, National Association. The acquisition gave Cascade the opportunity to strengthen its footprint in Oregon, as well as move into the Washington market. The company’s total deposits increased 23.7% year-on-year in the first quarter of 2016 to $2.6 billion, mainly due to the $469.9 million addition in deposits from the aforementioned branch acquisition. There were nine hedge funds vehicles tracked by Insider Monkey with stakes in the holding company at the end of March, which accumulated nearly 23% of the company’s outstanding shares. Matthew Lindenbaum’s Basswood Capital reported ownership of 3.79 million of Cascade Bancorp (NASDAQ:CACB) in its latest 13F.

WL Ross & Co.’s Second-Largest Position: Sun Bancorp Inc. (NASDAQ:SNBC)

– Number of shares owned by WL Ross & Co. as of March 31: 4.26 Million

– Value of WL Ross & Co.’s holding as of March 31: $88.14 Million

WL Ross & Co. had 4.26 million shares of Sun Bancorp Inc. (NASDAQ:SNBC) in its pool of holdings at the end of the first quarter of 2016. The 4.26 million-share position was valued at $88.14 million and made up 15.7% of the firm’s portfolio. The shares of the holding company for Sun National Bank are nearly flat year-to-date, but they are up 10% in the past 12 months. The company reported net income of $0.8 million for the first quarter of 2016, which marked the fifth consecutive profitable quarter for the bank. The first-quarter bottom-line figure compares to net income of $1.6 million recorded for the final quarter of 2015 and $2.8 million reported for the March quarter of 2015. A mere six hedge funds from our system had Sun Bancorp shares in their portfolios at the end of the March quarter, which stockpiled 30% of the bank’s shares. Anton Schutz’s Mendon Capital Advisors owns nearly 144,000 shares of Sun Bancorp Inc. (NASDAQ:SNBC) as of March 31.

WL Ross & Co.’s Largest Position: Navigator Holdings Ltd (NYSE:NVGS)

– Number of shares owned by WL Ross & Co. as of March 31: 21.86 Million

– Value of WL Ross & Co.’s holding as of March 31: $353.10 Million

Navigator Holdings Ltd (NYSE:NVGS) was the largest holding within WL Ross & Co.’s portfolio at the end of March, accounting for a whopping 62.3% of the firm’s portfolio. The 21.86 million shares of Navigator owned on March 31 were aggregately worth $353.10 million at quarter-end. The owner and operator of the world’s largest fleet of handysize liquefied gas carriers has seen its market valued climb by nearly 3% since the start of 2016. The company’s fleet consists of 38 vessels, including seven newbuilding vessels scheduled for delivery by mid-2017. Navigator’s operating revenue for the first quarter of 2016 was $76.4 million, up $2.2 million year-on-year. The increase was mainly driven by a higher weighted average number of vessels, partly offset by a decrease in fleet utilization due to softening market conditions and the impact of the collision of Navigator Aries in June 2015. Clint Carlson’s Carlson Capital LP owned 1.07 million shares of Navigator Holdings Ltd (NYSE:NVGS) at the end of March.

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