Wilbur Ross’s Funds Have Posted Mediocre Returns in Last Decade
(Bloomberg) -- Billionaire investor Wilbur Ross, extolled by Donald Trump as someone who “knows how to help companies succeed,” has had a hard time making his own firm thrive.
For the last decade, Ross, the president-elect’s nominee for Commerce Secretary, has delivered lackluster results after posting impressive investment gains in the early 2000s, according to fund data compiled by Bloomberg. His New York-based firm, WL Ross & Co., specializes in restructuring and reviving ailing enterprises.
Mainly on the strength of a $2.9 billion gain made selling International Steel Group Inc., a company Ross pieced together from bankrupt assets of several U.S. steelmakers, WL Ross posted a 79 percent annualized net return on a fund started in 2002, according to California Public Employees’ Retirement System data as of March 31. The fund raised $394 million.
An earlier $200 million fund notched a 35 percent annualized return, according to Calpers’s private equity documents. Ross took over management of the fund in 2000, the year he started WL Ross.
Since the mid-2000s, returns have tumbled.
Ross had uneven results applying his steel-consolidation model to other industries, according to people familiar with the firm’s performance, profiting in coal and flopping in textiles.
Bets on banks walloped by the financial crisis also were mixed: Florida-based BankUnited Inc. and Bank of Ireland Plc were winners, while a big wager on Greece’s Eurobank Ergasias SA is under water, said the people, who declined to be named because the information is private.
WL Ross, according to one person, also invested more than half of its 2011 fund in shipping, an industry that has been hurt by overcapacity. Investments since 2013 in beleaguered dry-bulk shipping companies have posted losses.
Tim Metz, a spokesman for Wilbur Ross, said Ross was unavailable for comment.
WL Ross has posted a net annualized loss of 3.8 percent on its 2005 main fund, according to performance data from Calpers as of March 31. It has delivered positive returns, through June 30, of 8 percent and 5.4 percent on its 2007 and 2011 funds, respectively, according to performance data from Oregon Public Employees Retirement System.
That compares with median net returns of 7.7 percent for all 2007 U.S.-based distressed private equity funds, and 7.9 percent for 2011 funds in that group, according to the London-based research firm Preqin Ltd.
WL Ross’s funds have shrunk as performance has slipped, dropping from about $4 billion for the 2007 pool to $640 million for another in 2011.
Ross, 79, relinquished leadership of WL Ross in 2014 to Stephen Toy and Greg Stoeckle while remaining chairman and chief strategist. He has an estimated net worth of $2.9 billion, according to the Bloomberg Billionaires Index.
WL Ross may have difficulty raising its new fund it’s currently marketing to investors with its well-connected founder out of the picture, said one of the people.
In a statement this week about Wilbur Ross’s probable departure, Toy and Stoeckle said Ross’s approach to investing was ingrained in the firm’s philosophy and “will remain a cornerstone of our future success.”