| Illustration by Want Some Studio. |
Marc Lasry is the quintessential American immigrant success story. Arriving in the U.S. from Marrakech, Morocco, some 50 years ago, the now-57-year-old propelled a love of basketball into a spot on a Division III team, attending college on an academic scholarship. He went on to law school and a career on Wall Street, eventually co-founding an alternative-investment firm, Avenue Capital Group, with his sister in New York in 1995.
But Lasry, a longtime Democratic donor and Clinton family insider, doesn’t want to talk about immigration — the hot-button issue du jour following President Trump’s ban on travelers entering the U.S. from seven Muslim-majority nations — or anything else to do with politics, for that matter. When asked for his take on the immigration controversy, Lasry demurs, saying, “My views on it are personal” and adding that he is not a political pundit.
Had Hillary Clinton defeated Donald Trump, it’s possible Lasry would not be sitting in his souvenir-and-collectibles-stuffed office at his firm’s Park Avenue headquarters. Lasry’s ties to the Clintons and the Democratic Party go deep: Chelsea Clinton worked as an analyst at Avenue Capital from 2006 to 2009, and Lasry was in the running for an ambassadorship to France in 2013, during the Obama administration. Another Clinton White House win might well have resulted in an administration role for Lasry.
But the investor is doing just fine, thank you. He sits at the helm of one of the most recognizable names in alternative-investment management and still has time to pursue his numerous and diverse passions: basketball, tennis, poker, comic book collecting, and wine. Today Avenue invests $12 billion on behalf of pension funds, college endowments, and wealthy individuals. On a recent winter afternoon, Lasry invited me to his quirky corner office, jam-packed with Superman comics, basketballs signed by superstars like former Milwaukee Bucks center Kareem Abdul-Jabbar (Lasry is a co-owner of the NBA franchise), and numerous photos of the investor with Democratic superstars, including various Clintons.
Seated at a round wooden table with ornately carved chairs, Lasry — silver-haired and dressed in his trademark cashmere crewneck sweater and patterned slacks — launches into an explanation of how Avenue has evolved in recent years, most notably with the closure of its hedge fund last year. That decision, like so many others made in the financial world, was all about the low-interest-rate environment that has hounded asset managers in the wake of the global financial crisis of 2008–’2009.
“If you’re running a liquid portfolio where you’ve got to give people quarterly liquidity and somebody sees you’re losing money in something, you can tell that person: ‘Don’t worry. I know it’s going to work out. I’m going to keep buying more,’” Lasry explains. But inevitably, “somebody’s going to say, ‘I just want my capital back.’” By “somebody,” Lasry means investors that have millions of pensioner or university dollars at stake.
With a hedge fund strategy, “you don’t have the luxury of time, and you need that luxury today,” Lasry continues. He is referring to his strategy of buying a company’s distressed bonds at, say, 60 cents on the dollar, then buying more as the price spirals down and holding them until the company returns to profitability.
“You need to be able to buy things when people want to sell,” he says. “You try to find areas where people are nervous and overreact.”
Perhaps ironically, one investment that worked out for Avenue in the past was leading the buyout of bankrupt Trump Entertainment Resorts (a process Lasry says ran very smoothly). Another was buying the secured debt of Ford Motor Co., some of which he was able to purchase as low as 30 cents on the dollar before selling it at par two years later.
That skill — running into a burning building when everyone else is heading for the exits — has been at the heart of Lasry’s work since he and his sister, Sonia Gardner, opened Avenue’s doors. He started learning the mechanics of bankruptcy when he clerked for the chief bankruptcy judge of New York’s Southern District while earning his JD at New York Law School in 1984. That was followed by investing in trade claims, bank debt, and the like at Cowen & Co., where he hired Gardner after her graduation from Yeshiva University’s Cardozo School of Law.
In 2015, Lasry — who knows something about risk — decided that given his preference to hold 20 to 30 percent of his hedge fund’s assets in cash when the risk-free rate is zero, it no longer made economic sense to run a liquid hedge fund.
“In the past, when you made 4 percent on cash if you couldn’t find an investment, at the end of the year you still made 4 percent,” he recalls. Holding cash has become too expensive. “The environment has changed so that a hedge fund has to take more risk.” Instead, Lasry says, Avenue is focusing on what it does best: distressed investing, but in less liquid vehicles with lock-up periods of up to seven years.
Lasry is a fan of long-term investments for his personal portfolio, too. Perhaps the most high profile of these is his co-ownership, with Fortress Investment Group co-founder Wesley Edens, of the Bucks. Basketball remains Lasry’s first love: To this day, he plays pick-up games when he has the time. He also can be found on the tennis or squash courts, or, on occasion, playing big-money poker with boldface hedge fund names, including Saba Capital Management founder Boaz Weinstein and AQR Capital Management co-founder Clifford Asness.
In Sonoma County, California, Lasry co-owns the cult Kistler Vineyards, which he purchased with former TPG Capital partners Bill Price, who manages the property, and David Bonderman in 2006. The wine is not usually available in stores; there is a long waiting list for Kistler’s famous, Burgundy-style chardonnay and pinot noir. But Lasry is hardly a connoisseur: He once knew so little about wine tasting that at his first Kistler board meeting he imbibed full glasses of the samples put out for tasting — rather than a modest pour of an ounce or two — and had to take a nap afterward.
It’s safe to say Lasry knows more about comics, another personal passion that he has managed to turn into a savvy value investment, despite an early obstacle. I tell him that I was one of those comic book collectors whose mothers dumped the lot when we left for college.
“My mother did the same thing,” he says. “When my parents moved, they just threw everything out.” Once Lasry was in law school, he began to collect old comics: “I think I was able to collect at a time when prices hadn’t moved up much.” He has only recently begun to divest himself of some of his collection, turning a ten-cents-on-the-dollar investment to 100 or 150 cents on the dollar.
