Sam Zell, who made his fortune scooping up distressed assets, told CNBC on Thursday that he’s been taking advantage of the stock market’s volatility.
The billionaire founder of Equity Group Investments said in a “Squawk Box” interview, “We’ve been buying some stuff that we thought was ridiculously low” in the recent coronavirus-driven sell-offs on Wall Street. “But not a lot,” he added.
Zell said he invested more in a couple of companies in which he already had significant ownership, including one in the battered energy industry, which is one of the worst-performing S&P sectors. The 30% decline in the energy index is well into bear market territory, defined by a decline of at least 20% from recent 52-week highs.
While refusing to name names, Zell said he’s spending a lot in energy, a sector he “always keeps track of” in hopes of finding opportunities. “We think the energy space is really cheap … and what helps is we were not in the energy space before.”
Zell said many investors would agree with him that energy companies are inexpensive, but they can’t take advantage of that because they already have too much exposure there. There’s no money chasing energy, he said.
“It started getting really dicey about six or eight months ago, when you saw stuff that would normally get sold very quickly [attract] no bids,” Zell said. “We just won a bid on a bankrupt company where we were the stalking horse [or initial] bid and they had the auction and nobody came.”
In the current climate, Zell said he’s buying energy stocks and debt as well as land, focusing on existing production rather than drilling.
Zell started in 1968 what would become Equity Group Investments, which began investing in real estate but has since branched out into the energy, communications, logistics, manufacturing, transportation and health-care sectors. He’s also co-founder and chairman of Equity Residential, Equity Lifestyle and Equity Commonwealth, three publicly traded real estate investment trusts, or REITs.
Forbes estimates Zell’s net-worth at about $5.6 billion.