Lessons In Distressed Debt Investing From Marc Lasry

One of the best distressed debt investors, Marc Lasry, co-founder and chief executive officer of Avenue Capital Group and the co-owner of the NBA's Milwaukee Bucks, was a guest on this week's edition of Wall Street Week. In the interview, Lasry talked about how he approaches distressed debt and how he overcomes his fears while buying things when others are panicking. Here is what he said.

Always Buy Something At A Discount

"If you sort of think about it, what we are trying to do is we are trying to buy something that we think is worth 100 cents for 60 cents on the dollar," Lasry began. "So, you always try to buy something at a discount to what you think the asset value is and you can only do that when you are buying from non-economic sellers, right? So, somebody who is nervous, somebody who has to sell.

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"So, you need to have a lot of drama or a lot of issues around the world. So, when you sort of look at it: 2008–2009, great time; 2011, also a really good time."

Believe In Your Analysis

Lasry was asked if it is hard and counterintuitive for many investors to buy something when there is a crisis and other investors are panicking. He replied, "It's hard. You develop the temperament, and the reason you develop that temperament— it's really hard when you buy something.

"I remember in 2008–2009, Ford Motor Company. Ford was [...] at 70, 60, 50, 40— and as it keeps going down, everybody goes, 'Oh, you are buying it as it gets cheaper, that's really great.'

"It's hard to buy when the world is telling you you are wrong, right? It's just— it's not an easy thing. You have got to really believe in your analysis. And I think for us, we did that and we kept buying, but I am not going to tell you it's easy," Lasry concluded.