Former Secretary of Commerce and billionaire investor Wilbur Ross has returned to active investing.
Simon Dawson/Bloomberg
Billionaire investor Wilbur L. Ross, Jr., is back in the game with a special-purpose acquisition company, and a big investment in a small, embattled company that he has taken a board seat on.
The former Secretary of Commerce—whose term ended in January—had left an active role in investing when he joined the federal government in 2017. This March, he founded Ross Acquisition Corp II (ticker: ROSS), a SPAC. Then in June he invested $4 million in Taronis Fuels (TRNF), a producer of renewable and socially responsible fuel products with a market capitalization of just over $100 million that trades over the counter.
“The SPAC and micro-cap turnaround investing are my reentry points to the investment community,” Ross wrote in a statement to Barron’s. “It feels really good to be back in action!”
Ross Acquisition isn’t currently pursuing a target. “We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any business combination target,” the company says on its site.
Ross himself, however, has made investments. Last week he disclosed in a form he filed with the Securities and Exchange Commission that he paid $4 million for 1.3 million Taronis shares. The shares were sold at $3 each in a $16.5 million private placement this month, and his shares give Ross a 7.8% stake, making him the second-largest shareholder in Taronis, according to S&P Capital IQ.
Taronis faces a number of challenges. It is “working diligently” to restate its financials. “This effort has included working openly with the SEC, engaging external forensic audit and IT consultants, and investing in the Company’s internal accounting team,” Taronis said in a news release. It expects to complete the restatements in the fourth quarter.
CEO Scott Mahoney resigned April 2, after drawing the ire of a shareholder group. New Taronis CEO Kevin Foti started on June 14. Foti is a former executive at industrial-gas firm Praxair, and at Linde (LIN), which acquired Praxair in 2018.
“Historically, I have invested in turnarounds where the perceived risk exceeds the actual risk,” Ross wrote. “Taronis has a troubled history, but its industrial-gas distribution facilities in Florida, Texas, Arizona, and California serve growing markets for industrial gases such as oxygen, nitrogen, and argon that will benefit from commodity price inflation.
“Prior management’s excessive costs are being addressed by the team, led by Kevin Foti, the new CEO. Most importantly, its proprietary product, MagneGas, apparently is more efficient and less pollutive than acetylene. The plan is to refocus the marketing effort of this ‘green’ product.”
Taronis “was capital-starved” until the private placement, Ross noted, and the restatements “will enable investors to evaluate the company, and I think they will like what they see.”
Ross recognizes that investing in a company the size of Taronis is “a whole new program for me.” He added, “I believe that micro-cap turnarounds represent one of today’s few overlooked market segments. They are too small for private-equity funds, but are a convenient size for me, individually.”
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.
