Billionaire Marc Lasry’s Favorite Stock Picks

Marc Lasry co-founded Avenue Capital in 1995 and has enjoyed great success investing in distressed and undervalued debt and equity. The fund’s management team looks for investment opportunities among industries in transition and managed approximately $11.6 billion worth of assets at the end of April. Avenue Capital’s equity portfolio comprised 19 positions and carried a value of $453 million at the end of the first quarter according to its latest 13F filing. The fund has large exposure to the transportation and consumer discretionary stocks, which account for 31% and 28% of the portfolio respectively. During the first quarter, Lasry and his team have reduced a large number of Avenue Capital’s positions, having increased only one at the same time. So, in this article we’ll analyze how these changed have impacted the fund’s top bets.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Trimmed Exposure to Meritor

Meritor Inc (NYSE:MTOR) stepped down one a peg in Avenue Capital’s hierarchy, as Lasry and his team dumped a third of their holding during the first quarter. According to its latest 13F filing, the fund now holds 4.85 million shares worth $39.1 million. Larry Robbins‘ Glenview Capital held the largest stake in Meritor Inc (NYSE:MTOR) at the end of the quarter among the funds followed by Insider Monkey. The fund indicated ownership of 8.12 million shares in its latest quarterly report, a position valued at $65.5 million. The manufacturer of auto parts has recently reported fiscal second quarter results that largely met Wall Street’s expectations. Meritor Inc (NYSE:MTOR) earned $32 million or $0.41 per share, adjusted for one-time costs, while revenues came in at $821 million. The consensus among analysts was $0.41 per share on the back of $840 million in revenues. The stock fell by as much as 30% in the beginning of 2016, before staging a comeback and regaining all the lost ground. Since then, however, it has been trending sideways in a range between $7.50 and $8.50 per share.

Sold Some YRC Shares

Avenue Capital also reported a reduction in its holding in YRC Worldwide Inc (NASDAQ:YRCW) at the end of the first quarter. The fund holds 4.79 million shares, down by 19% over the quarter, reportedly worth $44.7 million. Mike Masters, on the other hand, has boosted his fund’s holding of the stock by 116% by the end of March. Masters Capital Management reportedly holds 2.45 million shares valued at $22.8 million. A provider of various transportation services, YRC Worldwide Inc (NASDAQ:YRCW) has a market cap of $293 million and does not pay a dividend. The stock is currently trading at a Price-to-Earnings (P/E) ratio of 27, higher than the industry average of 21. The stock is down by around 36% since the beginning of the year. For the first quarter, YRC Worldwide Inc (NASDAQ:YRCW) reported a loss of $0.37 per share on $1.12 billion in revenue, while analysts were expecting $1.14 billion in revenue and a loss of $0.38 per share.

Turn the page to find out which are the fund’s current top three bets.