Make Billions from Scraps – Crazy Investment Strategy of Marc

Make Billions from Scraps – Crazy Investment Strategy of Marc
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Falling off a cliff, the largest single-point drop in share prices continued to tumble in the aftermath of the Lehman Brothers collapse. While Wall Street was in panic, one hedge fund decided to go big, committing billions of dollars to companies near bankruptcy. The owner of this hedge fund is Mark Lasry. He was a special kind of investor who thrives when there’s blood on the street. In 2008, with or without a bailout, the big three automakers faced massive layoffs.

Lasry, however, believed there was no way the U.S. government would let the auto industry fail. He foresaw the unthinkable consequences of an industry collapse and anticipated that Congress would step in to bail them out. Recognizing the potential opportunity, Lasry focused on a great investment – Ford, the nation’s second-largest automaker. Avenue Capital began buying $500 million of Ford’s bank debt at a significant discount to face value.

Born in Marrakech, Morocco, Lasry’s parents moved to a two-bedroom apartment in Hartford, Connecticut, in 1966. Lasry shared a bedroom with his two sisters. His father wrote computer code, and his mother was a private school teacher. Despite financial challenges, Lasry got a great education, emphasizing the importance of academic success in his household.

Lasry attended Clark University in Worcester, Massachusetts, with the help of scholarships and loans. Graduating in 1981 with a degree in history, he then enrolled in New York Law School. However, to pay for his tuition, Lasry took a job as a UPS driver, a decision that amused his Jewish mother, who had expected him to become a lawyer or a doctor.

After law school, Lasry clerked for Edward Ryan, chief bankruptcy judge for the Southern District of New York. This experience made him an expert on distressed companies and how to profit from them. Lasry realized he was looking at a large and relatively untapped market with little competition.

Taking advantage of the hedge fund industry boom initiated by Reagan’s deregulation, Lasry switched from practicing law to the world of high finance. He joined investment firms specializing in distressed companies, eventually making $25 million for Randy Smith in his first year. In 1987, he landed a significant position at Cowen and Company, where they ran partners’ capital.

In 1990, Lasry, along with his sister Sonia Gartner, opened their own boutique distressed brokerage firm with $1 million of their capital. They aimed to make commissions from buying and selling debts on clients’ behalf before forming a portfolio. By 1995, they became one of the biggest private distressed debt brokerage firms.

In 1995, Lasry and Gartner formed their first Avenue Fund with less than $10 million. Although a small amount in the hedge fund world, they knew they could achieve more than 50% returns per year. Avenue Capital grew rapidly, reaching $1 billion in five years. Lasry’s strategic approach involved maintaining 40 to 50 positions, with about 80% invested and 20% in cash to seize new opportunities.

Surprisingly, Avenue Capital didn’t use leverage to enhance returns. Lasry’s astute investment in Smith International showcased his ability to buy distressed claims at a fraction of their value, negotiating individually with creditors. By early 2000, Avenue Capital consistently achieved double-digit returns.

Lasry’s foresight and ability to spot opportunities in distressed markets allowed Avenue Capital to thrive, making him a successful investor in the world of high finance.


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