After graduating in 1984, Lasry practiced bankruptcy law and then moved to distressed-securities firm Smith-Vasiliou Management, where he invested in trade claims, which are rights to payments from debtors that have filed for bankruptcy. Lasry next went to Cowen & Co., where he hired Gardner after she graduated from Yeshiva University’s Cardozo School of Law.
In 1988, the siblings started a distressed-debt brokerage whose sole client was Bass’s Acadia Partners. They managed $150 million through the brokerage, naming it Amroc Investments — an anagram of the French word for Morocco. That’s how Lasry met Bonderman, Bass’s chief investment officer, who became his mentor.
Returns of 70 percent
Lasry and Gardner parted ways with Bass in 1990, after which Lasry produced average annual returns of 70 percent. They started Avenue in 1995, bringing in sister Ruth Steinberg, 47, who trades bank debt, in 2004.
Lasry and Gardner are opposites. Lasry says he’s more extroverted, while his sister is introverted. He lives with his family in a townhouse on Manhattan’s Upper East Side, while Gardner and her son live across town on the West Side. A tennis and basketball player standing 6 feet tall who favors pullovers and eschews socks with his loafers, Lasry towers over the slender, 5-foot-5-inch Gardner, who sported a printed dress with a long aubergine jacket for a December interview.
“He sees the glass as half-full; I see the glass as half-empty, so it works,” says Gardner, who majored in philosophy at Clark. “He comes into my office and he says, ‘Hey, Smiley, what are you in a bad mood about today?’ ”
Gardner and Lasry own 80 percent of the firm. Morgan Stanley bought 15 percent of the firm valued at about $250 million to $300 million in 2006. Bonderman owns less than 5 percent. Morgan Stanley spokesman Matt Burkhard declined to comment for this article.
Lasry’s investments can look dicey. In 2009, Avenue’s Europe fund invested in Regency Entertainment, a Greek casino company, buying stakes at 40 cents on the dollar. As the European sovereign-debt crisis worsened, the casino’s bank debt plummeted to 25 cents on the dollar. Lasry also owns bonds of Hovnanian Enterprises, the worst-performing home-builder stock in 2011. Hovnanian’s bonds in mid-January were trading at 45 cents on the dollar, about the same price he paid for them last year.
Deal with Trump
Lasry also took control of Trump Entertainment Resorts as it went through its third bankruptcy in 2010, gaining a 22 percent stake. In October 2011, Lasry and Donald Trump announced plans to set up an online gambling venture — if and when the United States legalizes such betting.
“He had a good plan, and his plan turned out to be correct,” says Trump, the real estate developer who picked Lasry’s reorganization plan over one proposed by billionaire investor Carl Icahn. “We’re going to be doing a big Internet-gaming deal together. It’s got to get approvals from government. It looks like the approvals should be imminent; why shouldn’t they approve it?”
Despite his optimism, Lasry doesn’t shrink from calling it quits on businesses that don’t continue to deliver profits. The firm wound down its Asia funds, which were its most profitable from the late 1990s to around 2004, after which returns declined.
And Lasry says his bets in the United States and Europe, which account for 80 percent of assets, could hold negative surprises. “In June, nobody thought there was a likelihood of Europe defaulting or of a double dip; now, there’s a likelihood that Europe could default,” Lasry says, while U.S. growth remains sluggish.
Still, he’s plunking down money in Europe on industries ranging from banking to cable. In the United States, he’s investing in independent power producers, papermakers, media companies and home builders. Those industries have already taken such big hits, he says, that the only place for them to go is up.
The full version of this Bloomberg Markets magazine article appears in the March issue.