“I am actually pretty optimistic”. This is what the billionaire Marc Lasry has to say when asked about the opportunities for the year 2021 in a Bloomberg interview.
Aside from being a billionaire businessman, Marc is also a hedge fund manager, CEO of Avenue Capital Group, and co-owner of the NBA’s Milwaukee Bucks. His firm Avenue Capital Group manages about $10 billion worth of assets and his net worth is currently at $1.8 billion. ACG’s investing strategy focuses in destressed debt and other kinds of exceptional situations investments particularly in US, Asia and Europe. Lasry was also considered to be U.S.A’s ambassador to France last 2013 under former President Obama but he prefers to have a role on the economic side than being a diplomat.
Marc has very good insight for the year 2021. According to him, even if there are problems in a number of places, it can be said that there is also growth. “During these kinds of times, what we should be looking for are opportunities where we can invest in situations where people need capital and we are providing that capital but we’re doing it at a pretty steep price.” said Marc.
The Federal Reserve’s zero bound made the banks lend more and it also encouraged consumers and businesses to spend more. From a different perspective, what ended up happening is that the zero bound made it easier for companies to borrow money and so anyone who could borrow is doing the exact thing. “But then, what it’s done is the reverse. If you can’t borrow then you’ve got to deal with folks like me.” stated by Marc. “And if you are doing that, we are able to charge 12-15% so it’s kind of odd. A zero rate environment yet we’re still charging 12-15.” he added.
Asked about his view on the bankruptcy law and if distressed investing is what the game has become, this is what Marc has to say, “I think you’ve got to understand bankruptcy law because what ends up happening now is you’re going to have a number of restructurings.” He continued, “But I would tell you the most important part. Today, it’s really about understanding the balance sheet of a company.”. He mentioned that, if they are going to lend, they must always be super secure because things can change on a dime and they want to make sure that they are covered. “Capital structure is going to be a little bit more important but you better have that legal background.” said Marc.
Assumptions about the recovery of the economy is that it’s not going to be as vigorous this time around, given how much debt has been incurred by the public and private institutions and given some of the crumbling with some of the covenant light loans that we have seen. Marc seconded this assumption by saying, “I think recoveries will definitely be lower and I think the fights are going to be absolutely insane because everybody’s going to be fighting over a smaller pie.” He also mentioned that it’s hard to have a strong recovery because people have taken more debt which means, ‘lesser equity value’.
Talking about the NBA, Marc was asked about the Bucks’ plan after the $228 million deal with Giannis Antetokounmpo in the 2021 NBA bubble. “The plan is simple. To try win a championship.” he said. Marc also admitted that the execution of that plan is going to be kind of hard however, the bucks will do everything they can to achieve the championship trophy. He also bragged about the bucks’ big three which he thinks are second to none in the east. “I think we’ll have a pretty good shot.” said Marc. Re-signing Giannis was really the hard part but the fact that they actually did that is actually a great thing for Milwaukee.
“I think it’s listening. It’s trying to bring about change. What we’ve tried to do is to be at the forefront of that(change), with our players and I think with everyone.” answered Marc when asked about what he wants to see from Milwaukee this year and what is their goal to get a more peaceful America. He affirmed that they are doing it(change) by seeing how and what the people need. “It’s going to be difficult. It’s going to take time but hopefully, if people have patience, we’ll be able to do it”.
You can check out Marc Lasry’s latest stock picks on this page.
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