In this piece, we will take a look at billionaire Marc Lasry’s top ten stock picks. If you want to skip our introduction to the billionaire hedge fund boss and the general investing climate, then take a look at Billionaire Marc Lasry’s Top 5 Stock Picks.
Marc Lasry is a hedge fund billionaire who started his career in the financial industry in the 1980s. According to Forbes Magazine, his net worth as of September 2023 sits at $2.1 billion, which is the highest level over the past nine years at least. Mr. Lasry runs the hedge fund Avenue Capital Group which he set up in 1995, roughly 11 years after he graduated from the New York Law School with a J.D. degree. According to Insider Monkey’s data, Avenue Capital’s latest portfolio had invested $77 million across 11 companies and a note.
The hedge fund focuses on investing in the debt and equity of companies that are facing financial distress but otherwise have strong market, growth, or other potential. In finance, this is called distressed security investing, and the premise behind this approach is to profit from the investment when the distressed company improves its performance and sees its debt value and share prices appreciate in its markets. Debt issued by distressed companies is often valued cheaply on the market since investors are wary about adequate future cash flows to repay the loan, and if the cash flow situation becomes clearer, then the debt value rises correspondingly.
Mr. Lasry set up his firm in partnership with his sister Sonia Gardner who is the president and managing partner of the hedge fund. Like her brother, she also has a law degree. Since Avenue Capital invests in both debt and equity, its assets under management (AUM) are actually significantly larger than its portfolio value. According to the hedge fund itself, as of September 30, 2023, Avenue Capital had a whopping $12.5 billion in AUM, which made it one of the biggest financial firms in the world. Insider Monkey took a look at the biggest hedge funds in the world as part of our coverage of the 15 Biggest Hedge Funds in the World by AUM, and the smallest hedge fund on this list was Seth Klarman’s Baupost Group which had more than twice the net assets of Avenue Capital which stood at $26 billion as of June 2022.
Taking a look at Marc Lasry’s top stock picks is important since the current stock market environment is tailor made for his hedge fund’s investment philosophy. The Federal Reserve has been on an aggressive interest rate hiking spree, and this tightens access to credit for both businesses and consumers. Businesses find it difficult not only to finance their daily operations, but their debt burden might also increase and they could find raising more debt harder. At the same time, financing debt also becomes tougher as a tight consumer environment feeds into the corporate world in the form of lower sales as buyers feel the pinch of high interest rates on their spending power.
So naturally, the number of distressed firms rises in an economy as it slows down, and this makes Avenue Capital’s investment portfolio particularly important for the next couple of quarters. Right now, investor focus has shifted from trying to gauge the Federal Reserve’s terminal Fed funds rate to trying to work out when the rates will start to come down. And unless the Fed starts to reduce rates, distressed companies will continue to find it hard to remain a going concern, allowing investors like Marc Lasry to analyze their stocks and see which firms might be worth taking a shot on.
The hedge fund’s investment strategy sees it invest primarily in three kinds of firms. These are firms with financial difficulties that are undertaking turnaround efforts, those that have entered bankruptcy, and companies that are undervalued through no fault of their own. Mr. Lasry’s top stock picks typically include these firms, but as we mentioned above, his fund also invests in other securities. Some of these include bank debt and high yield debt, and the recent turmoil in the bond market makes this hedge fund quite interesting.
Avenue Capital is a global hedge fund and it has operations in Europe, Asia, and the U.S. Within these global divisions, the firm has three separate investment strategies. The first and second lien secured bank loan strategy typically targets large firms with non cyclical business models. Some examples of these companies, also called consumer staples firms, are Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and The Coca-Cola Company (NYSE:KO). The other two strategies see Avenue Capital invest in high growth firms that have venture capital backing and firms with a focus on environmental and social sustainability.
So, what are Marc Lasry’s top stock picks? We took a look a look and the top three firms are Amplify Energy Corp. (NYSE:AMPY), Seadrill Limited (NYSE:SDRL), and Sitio Royalties Corp. (NYSE:STR).
Our Methodology
To compile our list of Marc Lasry’s top stock picks, we used Avenue Capital’s filings with the Securities and Exchange Commission (SEC) for the second quarter of this year and selected the top ten companies in which the hedge fund had held the highest dollar value stakes.
Billionaire Marc Lasry’s Top 10 Stock Picks
10. Exela Technologies, Inc. (NASDAQ:XELA)
Avenue Capital’s Q2 2023 Investment: $317,742
Number of Hedge Fund Investors in Q2 2023: 4
Exela Technologies, Inc. (NASDAQ:XELA) is a software company that offers administrative services such as document management and payment processing. Despite being part of a lucrative industry that is believed to grow along with the internet, the company’s shares are down by 77% year to date. However, Avenue Capital’s $317,742 stake suggests that there might be more to the firm.
During this year’s second quarter, four out of the 910 hedge funds part of Insider Monkey’s database had held a stake in Exela Technologies, Inc. (NASDAQ:XELA). Out of these, the firm’s largest shareholder is Aaron Weitman’s CastleKnight Management since it owns 181,056 shares that are worth $742,330.
Exela Technologies, Inc. (NASDAQ:XELA). joins Seadrill Limited (NYSE:SDRL), Amplify Energy Corp. (NYSE:AMPY), and Sitio Royalties Corp. (NYSE:STR) in our list of Marc Lasry’s top stock picks.
9. Orchestra BioMed Holdings, Inc. (NASDAQ:OBIO)
Avenue Capital’s Q2 2023 Investment: $426,083
Number of Hedge Fund Investors in Q2 2023: 6
Orchestra BioMed Holdings, Inc. (NASDAQ:OBIO) is a biotechnology company that is headquartered in New Hope, Pennsylvania. It provides medical devices and develops treatments for heart ailments. Its shares are down 49% year to date, but analysts have set an average price target of $20.33 for the stock.
As of Q2 2023, six hedge funds out of the 910 that were part of Insider Monkey’s research were the firm’s investors. Orchestra BioMed Holdings, Inc. (NASDAQ:OBIO)’s biggest hedge fund investor is Joseph Edelman’s Perceptive Advisors due to its $14.3 million stake.
8. Impel Pharmaceuticals Inc. (NASDAQ:IMPL)
Avenue Capital’s Q2 2023 Investment: $518,578
Number of Hedge Fund Investors in Q2 2023: 3
Impel Pharmaceuticals Inc. (NASDAQ:IMPL) is another biotechnology company. The firm’s products seek to help patients with nervous system disorders, and its second quarter earnings came with some good news for investors as Impel Pharmaceuticals Inc. (NASDAQ:IMPL) beat analyst EPS estimates by 96 cents and delivered a profit at a time when most were expecting a loss. However, out of its four latest quarters, the firm has beaten analyst EPS estimates in only two.
After digging through 910 hedge funds for their June quarter of 2023 shareholdings, Insider Monkey discovered three Impel Pharmaceuticals Inc. (NASDAQ:IMPL) investors. Albert Cha and Frank Kung’s Vivo Capital is the largest investor among these since it owns $3.6 million worth of shares.
7. Forge Global Holdings, Inc. (NYSE:FRGE)
Avenue Capital’s Q2 2023 Investment: $611,164
Number of Hedge Fund Investors in Q2 2023: 2
Forge Global Holdings, Inc. (NYSE:FRGE) is a financial services company that is one of the more interesting ones on our list. While most people trade on public markets, Forge Global Holdings, Inc. (NYSE:FRGE) enables investors to contact private shareholders and trade shares. The stock is rated Buy on average and analysts have penned in a 69% upside for the stock based on the average share price target of $4.
As of June 2023, two out of the 910 hedge funds part of Insider Monkey’s research had invested in the firm. One of these is Marc Lasry’s Avenue Capital, making it one of the fund’s top stocks. The firm is also Forge Global Holdings, Inc. (NYSE:FRGE)’s largest shareholder in our database since it owns $611,164 worth of shares.
6. Eyenovia, Inc. (NASDAQ:EYEN)
Avenue Capital’s Q2 2023 Investment: $1.2 million
Number of Hedge Fund Investors in Q2 2023: 4
Eyenovia, Inc. (NASDAQ:EYEN) is a biotechnology company that provides treatments for people with eye diseases. The firm’s second quarter earnings call saw management tout a $1 billion market for its drug that deals with age related lens hardening in older adults.
During Q2 2023, four out of the 910 hedge funds surveyed by Insider Monkey had bought and owned Eyenovia, Inc. (NASDAQ:EYEN)’s shares. Marc Lasry’s Avenue Capital is the biggest hedge fund investor, owning 547,807 shares that are worth $1.2 million.
Amplify Energy Corp. (NYSE:AMPY), Eyenovia, Inc. (NASDAQ:EYEN), Seadrill Limited (NYSE:SDRL), and Sitio Royalties Corp. (NYSE:STR) were some of the biggest investments in Marc Lasry’s Q2 2023 investment portfolio.
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Disclosure: None. Billionaire Marc Lasry’s Top 10 Stock Picks is originally published on Insider Monkey.