Fear is to blame for the market’s recent declines, says Wilbur Ross, WL Ross & Co. chairman/CEO. A look at where he is putting his money to work.
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Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More
the moves are the wildest since is it fear to blame for themarket’s recent declines? according to billionaire investor wilbur ross, chairman and ceo of ross & company, the answer would be yes. he has made his name in distressed assets late innedly, making big investments. talk writing he’s putting hismoney these day, welcome back. what was this all about thatwe’ve been through the past couple of weeks? what was all that volatility about in your view? two things. about regular investors becoming frightened by the freak show relating to the budget talks and all that. then the down grade. i think it was compounded by the high free consequentsy trading. while they think their algorithmses are the same, i think they’re different.you had a tremendous amplification of fear from regular investors. was that itself an opportunity to get into this market?we bought some things during that period under the simpletheory, we don’t think it’s the end of the world. if we like something at 100 and now it’s $85, we should like it better.you’re looking to europe. right. you’re looking to ireland as an investment opportunity? yes. we like ireland very much. unlike the club med country, it doesn’t need structural reform on the economy. all it really needs is to get through the system, thefinancial crisis caused when its banks went berserk. ireland fundamentals are still there. the one english speaking countrythat uses the euro. lowest tax rate in europe. young, well educated labor force, favorable trade balance year in and year out. very good telecom and transportation infrastructure and logistics. those are permanent features. they just have to get through the system of the financial crisis. is being part of the eurozone now a growth catalyst or lodestone on growth?ireland does have a favorable trade balance not just with therest of the world other than europe but also the rest of europe.they actually figured out how to export services, which is a verytricky thing to do. we have great confidence ireland’s economy, while it’s mortgaged now, will be the first to recover. what do you think are the particular things they will do to solve the problems europe faces right now? they’d do better to meet inprivate to figure out the solutions and then announce it. all these meetings that lead to no conclusion. it raises expectations. they aren’t helpful and part of the malaise today. would a european bond help? it doesn’t make sense to have a paying european bond unless you had a truly europeanized set of countries. right now, they’re quasi together, not fully together. my own guess is eventually, they have to come fully together for it to work. you also look to energy as investment opportunities, specifically, shale, right? yes. we we liked everything the market didn’t like today. that’s why you are where you are, right? what is it about shale? prices are very low. shale is the reason prices are very low. with the advent of shell gas technology, horizontal drillingand fracturing, they have now found a hundred year supply ofnatural gas in this united states. that has equated a congestion of supply and really destroyed the price of natural gas from themid-teens down to about $4. you don’t think that lasts? we don’t think it can last because a majority of the industry needs 6 1/2 or $7 gas in order to live, to be economical. the company we’re invested in, esco, does not need anything like those prices, they actually just reported earnings from the june quarter. we believe that eventually, natural gas will be a big part of the energy solution. it’s the least polluted fossil fuel, lowest cost fossil fuel and least amount of capital expenditure to create a gas fired power plant. either we’re not going to have electricity anymore or we’re going to find some reasonable source. the thing that’s great about shell, it’s not only cheaper, it’s domestic. it’s an offset to our balance of payments. what did you buy last week? well, we bought some assured guarantee recently. any of the other financials out there? those were the main things. of course, bank of ireland. and bank of ireland, it goes without saying. are you looking at any of the u.s. based financials seeing very low prices these days? anybody going to pull it out there, you think? we decided to stick with the same names that we already have real positions in. those are the names we’re the most comfortable with and the names we know the best. stick with what you know. good news from wilbur ross. good to see you. melissa.