Many investors are running away from Europe like it is the plague, but hedge fund billionaire Marc Lasry is bucking the trend.
His fund Avenue Capital Group finished raising almost $3 billion for a fund that will invest in European corporate bonds, The New York Times reported. And he has his own skin in the game – to the tune of $75 million.
That looks like a pretty bold bet, given that the euro fell to a two-year low Monday, Spanish government bond yields rose to record highs and fears rose that Greece will not be able to meet the terms of its bailout.
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But Lasry and some other major investors are betting on an eventual turnaround in Europe. He emphasizes that he is not looking for his trades to pay off quickly. “It’s not a three-month bet or a six-month bet,” he told The Times. “It’s a three- to five-year bet.”
Other big-timers taking the plunge into Europe include Blackstone Group, Kohlberg Kravis Roberts & Co. and Leon Black of Apollo Global Management.
To be sure, Lasry is sticking with stronger nations in Europe: Britain, France, Sweden and other northern countries. He is staying away from Greece, Spain and Italy.
The strategy seems like a sound one. The baby appears to be getting thrown out with the bath water in Europe.
“Europe isn’t going away, and the companies aren’t going away,” Lasry said. “You can never time a bottom. What you can do is a time a cycle and five years from now, people will say, ‘Why didn’t I buy?’”
Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.
Similarly, Peter Faulkner, a credit portfolio manager at P. Schoenfeld Asset Management, bet on European corporate bonds, according to Reuters.
“At the end of last year, European financials were massively battered down so we went long those corporate credits — they were great investments,” Faulkner said.
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