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The Thesis
Ross bought bankrupt US steel companies for pennies on the dollar, consolidated them into the International Steel Group, then sold to Mittal Steel for a massive premium.
The Story
In 2002, the US steel industry was in shambles. LTV Steel, Bethlehem Steel, and other iconic American steelmakers were bankrupt, crushed by foreign competition and legacy costs. Most investors saw a dying industry. Wilbur Ross saw an opportunity. He purchased the bankrupt companies at a fraction of their replacement value, shed their legacy pension and healthcare obligations through the bankruptcy process, and consolidated them into a single, efficient entity called International Steel Group.
Ross's timing was impeccable. Just as he was completing the consolidation, global steel demand surged — driven by China's infrastructure boom — and steel prices skyrocketed. In 2005, Ross sold International Steel Group to Mittal Steel for $4.5 billion, generating enormous returns on his original investment of roughly $90 million. The trade demonstrated Ross's specialty: buying distressed assets in out-of-favor industries, fixing them operationally, and benefiting from the eventual cyclical recovery that others were too impatient or too pessimistic to wait for.
Key Insight
Distressed industries have cycles — buy assets at bankruptcy prices, fix operations, and let the cycle do the heavy lifting.
“Bankruptcy is the great American recycling bin. What goes in battered comes out renewed.”
Wilbur Ross
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