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Spotlight Luncheon: A Conversation with Marc Lasry '84

Marc Lasry ’84 is living proof that great success in life is not always the result of meticulous planning.

“When I came to law school, I didn’t have a burning desire to be a lawyer,” Mr. Lasry told a rapt audience at a Spotlight Luncheon in the Wellington Conference Center on January 24. “I certainly didn’t grow up wanting to be a hedge fund guy.”

In fact, Mr. Lasry almost didn’t go to law school at all because after he graduated from college, he was offered a job as a UPS truck driver, and he seriously considered accepting it.

“My wife didn’t want me to be a truck diver,” he explained. And so, Marc Lasry went to New York Law School. Today, he is a Managing Partner of Avenue Capital Group, a hedge fund he founded, which manages assets valued at approximately $12.5 billion. He also is the founder and Senior Managing Director of Amroc, one of the nation’s largest broker/dealers of distressed securities; a well-known philanthropist; and a major supporter of, and fundraiser for, the Democratic Party.

“New York Law School enabled me to do things I never thought I could do,”

Mr. Lasry said. He attributed his success in life to his legal education, his willingness to take chances, hard work, and old-fashioned good luck.

“I think I was in the right place at the right time,” he commented.

Born in Morocco, Marc Lasry came to the United States with his family at the age of seven. He spoke no English when he began attending public school in Hartford, Connecticut. Mr. Lasry related how he was placed in a class with other children who also didn’t speak English, and the class was conducted largely in Spanish, another language he didn’t speak.

“The teacher told my mother I had issues,” he recalled. “She said I was a little bit retarded because I never spoke.”

Eventually, Mr. Lasry learned English, began to speak, and went on to Clark University where he earned a B.A. in history in 1981. At college, he also met his wife Cathy Cohen, Class of 1983. The two married while Mr. Lasry was in law school, and are the parents of five children. Mr. and Mrs. Lasry provided the funding for the Lasry Center for Bioscience, which opened at Clark University in January 2005.

Although Mr. Lasry was unsure about a career in law, he said he was interested in learning. While at New York Law School, he clerked for the Honorable Edward Ryan, Chief Bankruptcy Judge of the Southern district of New York. He began his career after law school as a specialist in bankruptcy law at the firm of Angel & Frankel.

After a year, Mr. Lasry received an offer to join an investment firm.

“All of us have roads we’re going to go down that we don’t anticipate,” he noted. He decided to accept the offer because as a lawyer, “I found I was never home.”

In his first year, Mr. Lasry made $25 million for his firm. He remembered that he was asked to name a sum he thought he should be given as a bonus and he decided to ask for one-half of one percent, or $125,000. When the firm offered him $10,000, Mr. Lasry said, ““I quickly realized that wasn’t the place for me.”

He left the firm for other corporate jobs and then founded, first Amroc, and then Avenue Capital Group.

“We invest in companies that are in trouble,” he explained. “We buy the debt of those companies at a discount.”

Between 1996 and 2001, Mr. Lasry said, Avenue managed assets worth $1 billion. From 2001 to 2006, those assets grew to $12.5 billion. By the summer of 2007, Mr. Lasry expects the assets to increase to $18 billion.

Avenue charges companies a two percent management fee and also collects 20 percent of all profits.

Operating a hedge fund is hard work and involves enormous amounts of travel, Mr. Lasry explained. Students interested in pursuing careers in this line of work need to know that “you’re going to need to put in your time and at the same time, you need to get a little bit lucky.”

Mr. Lasry used his fund’s involvement with Delta Airlines to make his point clear. Avenue purchased Delta for 25 cents on the dollar even though it was a risky investment because of the threat of terrorism against airlines.

“There’s no way to hedge against that,” he explained.

Still, his company took the risk. Then last year, two events occurred that made the risk pay off. First, security agents at Heathrow airport in London foiled a plot by terrorists to blow up several airplanes using bombs made of common liquids. If the plot had not been discovered and the planes had actually exploded, the airline industry would have experienced a major loss of confidence and lost most of its value as an investment. Second, U.S. Air decided to buy Delta Airlines. The value of the bonds Mr. Lasry’s company had purchased rose from 25 cents on the dollar to 65 cents.

“When we bought the bonds, we expected it would take two to three years for them to go to 40 cents,” Mr. Lasry said.

In his business, he continued, “you can do everything and do it the right way,” but sometimes what makes a deal succeed really is luck.

Mr. Lasry acknowledged that a certain amount of daring also is required.

“In what I’ve done, you’re always sticking out your neck,” he said. He urged the students at the luncheon to find something they enjoyed doing and have confidence in their own opinions.

Mr. Lasry said when he hired people, he looks for that combination.

“There are a lot of really smart people out there,” he noted, but what makes the people he looks for distinctive is that in addition to being smart, they also really want to do the work and can find new ways to solve problems.

“I look for people who are bright, but who also have a lot of street smarts,” he said. To do the kind of work he does, Mr. Lasry concluded, people need both book smarts and street smarts to they can think on their feet and come up with novel ideas. Mr. Lasry said his goal is to hire people who are smarter than he is.

“I don’t want to be the smartest person in the firm,” he concluded.

Speaking of the hedge fund field, Mr. Lasry concluded, “It’s a great business and I love it.”

Click Here to view a video of Marc Lasry speaking at the Spotlight Luncheon.