Wilbur Ross Checks Sparse ‘Dustbin’ and Finds Shippers, Miners

(Bloomberg) -- Billionaire investor Wilbur Ross said he’s scouting for distressed companies in marine shipping, machinery and mining, but opportunities are becoming scarce as soaring financial markets disconnect from actual economic growth.

Shares of seaborne shipping companies are trading at big discounts to the already-depressed market value of their vessels, said Ross, chairman of WL Ross & Co., in an interview Thursday on Bloomberg TV’s “Bloomberg ‹GO›.” He also favors manufacturers of machinery and tractors amid weak capital spending.

Ross said he’s still buying bonds of “broken down” oil and gas companies, but that’s becoming more difficult because the rally in energy markets has pushed up prices, and he’s done some selling. That pretty much describes the condition of the whole market, Ross said. 

“It’s harder and harder and harder to find value, even if you look in the dustbin,” Ross said.

Ross, 78, built his fortune investing in troubled companies, including the oil and gas, steel and financial industries. He’s been stymied this year by what he sees as a “severe” disconnect between gains in financial markets and what he called the real economy.

“I don’t see the big engine for growth anywhere in the world, and yet the market goes prancing along very nicely,” Ross said. “It’s a little scary.”

Market Gains

The S&P 500 Index delivered a total return of more than 100 percent in the past five years, while central bank policies have pushed yields on more than $9 trillion of government securities worldwide below zero, according to Bloomberg Barclays index data. The Federal Reserve delayed an interest-rate increase again this week as policy makers curtailed their estimate of the economy’s long-run growth rate.

Shippers have come under scrutiny amid slowing global trade and a capacity glut. South Korea’s biggest container mover Hanjin Shipping Co. filed for bankruptcy protection this month, spurring speculation that distressed assets may come to market and that the industry might consolidate.

Earlier this year, Ross told Bloomberg he might buy nonperforming loans in China. He’s now hesitating to invest because of the ties among state-owned enterprises, banks and government officials, Ross said. The problem is figuring out if lending decisions are political decisions or economic, he said.

“We don’t see that we can add a lot to a political decision,” Ross said.