In this article, we reviewed billionaire Marc Lasry’s investment philosophy and portfolio management strategies. We also examined the top stock picks of Marc Lasry’s Avenue Capital. You can skip our detailed analysis of Marc Lasry’s history, investment philosophy, and hedge fund performance and jump directly to Top 4 Stock Picks of Marc Lasry’s Avenue Capital.
Billionaire businessman Marc Lasry, the co-founder of a New York-based multi-strategy hedge fund Avenue Capital Group, made a fortune by buying distressed and undervalued debt and equity. The Morocco-born billionaire, who is currently sitting on a net worth of $1.8 billion, was listed as one of the 25 highest-earning hedge fund managers in 2013, with $280 million in annual earnings. In 1995, the distressed asset investor and his sister Sonia Gardner founded Avenue Capital Group with $100 million in seed money, which expanded into a multibillion-dollar hedge fund. He bought the NBA champions, Milwaukee Bucks, for $550 million in 2014.
Marc Lasry, 61, has a positive outlook for 2021 despite an uncertain environment.
“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.
As part of this approach, Avenue Capital Group held a position in 10 securities in its 13F portfolio valued at $216 million as of the end of June, focusing mostly on distressed energy and utility companies. During the first half of 2021, all subsectors of the energy sector have outshined the broader market index after being among the laggards in 2020. Besides Frontier Communications Parent, Inc. (NASDAQ:FYBR) and Impel NeuroPharma, Inc. (NASDAQ:IMPL), the rest of his 7 stock positions belong to the energy sector. He also initiated a position in Chesapeake Energy Corporation Class C Warrants (CHKEL) during the second quarter.
Marc Lasry’s Avenue Capital’s top energy stock picks include California Resources Corporation (NYSE:CRC), Transocean Ltd. (NYSE:RIG), and SM Energy Company (NYSE:SM).
Marc Lasry of Avenue Capital
Why should we pay attention to Marc Lasry’s stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start digging into the top stock picks of Marc Lasry’s Avenue Capital. We analyzed Marc Lasry’s Avenue Capital Group’s second-quarter 13F portfolio for this article.
Top Stock Picks of Marc Lasry’s Avenue Capital
9. California Resources Corporation (NYSE:CRC)
Marc Lasry’s Stake Value: $2.7 million
Percentage of Marc Lasry’s 13F Portfolio: 1.26%
Number of Hedge Fund Holders: 20
Marc Lasry’s strategy of initiating a position in California Resources Corporation (NYSE:CRC) during the final quarter of the pandemic year has brought massive returns for his hedge fund so far in 2021. California Resources Corporation (NYSE:CRC) was in financial distress last year due to the collapse of energy prices. However, California Resources Corporation (NYSE:CRC) shares have made a big turnaround this year, thanks to the rebound in oil and gas prices.
Some hedge funds have capitalized on the recent share price gains of the California Resources Corporation (NYSE:CRC). The energy giant has experienced a decrease in support from the world’s most elite money managers lately. California Resources Corporation (NYSE:CRC) was in 20 hedge funds’ portfolios at the end of June compared to 23 positions in the prior quarter.
8. Impel NeuroPharma, Inc. (NASDAQ:IMPL)
Marc Lasry’s Stake Value: $2.92 million
Percentage of Marc Lasry’s 13F Portfolio: 1.35%
Number of Hedge Fund Holders: 6
The small-cap biotechnology company Impel NeuroPharma, Inc. (NASDAQ:IMPL), which is ranked eighth in the list of the top stock picks of Marc Lasry, is also a newcomer in Avenue Capital Group’s 13F portfolio. Shares of Impel NeuroPharma, Inc. (NASDAQ:IMPL) saw substantial volatility since its debut on NASDAQ in May. FDA’s approval of Impel NeuroPharma’s (NASDAQ:IMPL) TRUDHESA (dihydroergotamine mesylate) nasal spray for the treatment of migraine will help in enhancing investor sentiment ahead.
Of the 873 elite funds tracked by Insider Monkey, the biotechnology company Impel NeuroPharma, Inc. (NASDAQ:IMPL) was in 6 hedge funds’ portfolios at the end of June.
7. Frontier Communications Parent, Inc. (NASDAQ:FYBR)
Marc Lasry’s Stake Value: $3.75 million
Percentage of Marc Lasry’s 13F Portfolio: 1.73%
Number of Hedge Fund Holders: 43
Frontier Communications Parent, Inc. (NASDAQ:FYBR) is one of the top stock picks of Marc Lasry’s Avenue Capital amid a solid share price run since it emerged from chapter 11 bankruptcy in May this year. Frontier Communications Parent, Inc. (NASDAQ:FYBR) has successfully lowered its debt by about $11 billion, helping it to emerge as a stronger company. Hedgeye analyst Andrew Freedman added Frontier Communications Parent, Inc.(NASDAQ:FYBR) to his best idea list, with expectations for 30% to 50% upside over the next 18 to 24 months.
Hedge funds also expressed confidence in Frontier Communications Parent, Inc. (NASDAQ:FYBR) recently. Out of the 873 hedge funds tracked by Insider Monkey, 43 were bullish on Frontier Communications Parent, Inc. (NASDAQ:FYBR) at the end of the second quarter.
6. SM Energy Company (NYSE:SM)
Marc Lasry’s Stake Value: $4.75 million
Percentage of Marc Lasry’s 13F Portfolio: 2.19%
Number of Hedge Fund Holders: 25
SM Energy Company (NYSE:SM) is one of the top stock picks of Marc Lasry’s Avenue Capital because shares of the independent oil exploration and production company soared 70% in the last six months alone. Marc Lasry initiated a brand new position in SM Energy Company (NYSE:SM) during the second quarter. The robust growth in oil price along with improving cash generation potential enhanced investor sentiments in SM Energy Company (NYSE:SM). .
The best stock pickers were in a bullish mood. The number of bullish hedge fund bets increased by 9 in recent months. SM Energy Company (NYSE:SM) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The New York-based investment management firm D.E. Shaw & Co., L.P. was the largest shareholder of the company.
5. Transocean Ltd. (NYSE:RIG)
Marc Lasry’s Stake Value: $9.76 million
Percentage of Marc Lasry’s 13F Portfolio: 4.50%
Number of Hedge Fund Holders: 27
Oil and gas drilling company Transocean Ltd. (NYSE:RIG) is one of the long-running stock holdings of billionaire investor Marc Lasry’s 13F portfolio. Although his hedge fund sold out 55% of its stake in the drilling company during the second quarter of 2021, the firm still held 2.15 million shares of Transocean Ltd. (NYSE:RIG). After years of a downtrend, the stock price of Transocean Ltd. (NYSE:RIG) grew substantially in the last twelve months, thanks to an improvement in energy product prices and growth in drilling activities.
Transocean Ltd (NYSE:RIG) shareholders have witnessed an increase in hedge fund sentiment recently. 27 hedge funds were bullish on Transocean Ltd (NYSE:RIG) at the end of June compared to 20 positions in the previous quarter. D.E. Shaw & Co., L.P. also lifted its position in the drilling company by 128% to 0.09% of the entire portfolio.
Transocean Ltd (NYSE:RIG) is engaged only in drilling activities while SM Energy Company (NYSE:SM), Chesapeake Energy Corporation (NASDAQ:CHK), California Resources Corporation (NYSE:CRC), and Gulfport Energy Corporation (NYSE:GPOR) are involved in exploration and production activities.
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Disclosure: None. Top Stock Picks of Marc Lasry’s Avenue Capital is originally published on Insider Monkey.
