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Billionaire Marc Lasry’s Top Picks

AVENUE CAPITALMarc Lasry is the co-founder and CEO of Avenue Capital Group. He has made a career focusing on distressed investing that began in the 1980s. Lasry went on to manage a fund doing just that for Robert Bass, and then proceeded to found a distressed debt brokerage firm called Amroc Investments. After several years at Amroc, Lasry and his sister Sonia Gardner started Avenue Capital Group with $7 million of their own capital.

Here are Marc Lasry’s top 10 holdings at the end of March:

Company Ticker Value ($000s) Activity
MAGNACHIP SEMICONDUCTOR CORP MX 242,802 0%
GENERAL MOTORS CO GM 47,457 -45%
CENTRAL EUROPEAN MEDIA ENT CETV 34,523 69%
LEAR CORP LEA 28,835 0%
C I T GROUP INC NEW CIT 23,499 -68%
TENET HEALTHCARE CORP THC 20,526 -31%
TRW AUTOMOTIVE HOLDINGS TRW 19,380 0%
SPECTRUM BRANDS HOLDINGS SPB 12,586 -63%
NAVISTAR INTERNATIONAL NAV 7,197 0%
VERSO PAPER CORP VRS 5,414 0%

Lasry scaled back a number of holdings this quarter including General Motors (NYSE:GM), Citigroup (C), Tenet Healthcare (NYSE:THC), and Spectrum Brands (SPB) but did add shares to Central European Media (CETV). We remain constructive on THC on the heels of Catholic Health Initiatives (CHI) win that hands over management of 56 of its hospitals to Conifer, which we think will tee up THC for significant earnings acceleration. It competes with the likes of Universal Health Services (UHS), which is solid company but is still digesting the Psychiatric Solutions acquisition. Once synergies materialize, revisiting valuation is a must. Community Health Systems (NYSE:CYH) also operates in the space, but we prefer THC’s organic growth to CYH’s M&A-driven inorganic growth. CYH does have a full pipeline but headwinds from reimbursement and the overbilling investigation will hold down the stock price. With HCA Holdings (NYSE:HCA) we find the most attractive aspect to be a special dividend like the one in February. We like the company’s focus on cost control and labor management but THC’s organic growth potential simply outstrips HCA’s as well as Health Management Associates (HMA), which operates in non-urban environments. HMA is on-track to meet FY 2012 guidance but we fail to identify meaningful catalysts for the stock versus THC’s with future Conifer contracts and performance breakdown in upcoming quarters.

Marc Lasry reduced his stake in General Motors by nearly half during the first quarter. General Motors is one of the 10 most popular stocks among hedge funds (see the 10 most popular stocks). There were 82 hedge funds with GM positions at the end of the first quarter. The stock is expected to earn close to $4 per share in 2012, giving it a forward PE ratio of 5.5. Rival Ford (NYSE:F) also have a very attractive price multiple. Ford is expected to make around $1.5 per share in 2012, giving it a forward PE ratio of 6.9. Billionaire David Einhorn has the biggest position in GM among the hedge funds we are tracking. Warren Buffett’s Berkshire initiated a brand new $250 million position during the first quarter, making him one of the top holders of GM stock (see Buffett’s new stock picks). Billionaires David Tepper and James Dinan prefer both stocks.

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