Why this billionaire hedge fund investor sees a once-in-a-lifetime opportunity

I’ve seen many articles recently naming the current state of the financial markets as a once-in-a-lifetime opportunity.

Indeed, it’s not every day that so many shares crash so hard and so far. But the last time we saw a pandemic was around 100 years ago, so few of us have experience of recent events.

Is it really a once-in-a-lifetime opportunity?

However, there’s a lot of uncertainty in the air about how fast economies and businesses can recover from the crisis. And it’s easy to use the phrase ‘once-in-a-lifetime’ without really believing it. Indeed, when stocks have plunged it’s natural for people to feel wary of the markets.

But last week I came across an article describing how a billionaire hedge fund investor described current market conditions as a once-in-a-lifetime opportunity. Marc Lasry founded investment firm Avenue Capital and explained his view of the investment landscape to Yahoo Finance.

Lasry’s company specializes in investments in distressed businesses. And, admittedly, he was talking about the opportunity for debt investors when he made his ‘once-in-a-lifetime’ comment. He thinks Avenue Capital can do “extremely well” by making loans to distressed companies.

I know that most ordinary investors don’t have the resources to get involved in the debt market like that. But I think we can interpret Lasry’s bullishness for shares. He went on to explain that in the US “you’ve actually got an economy that’s fine, and you’ve got a Fed pumping trillions of dollars in”.

I reckon he’s implying the US government will help companies to survive the immediate crisis by stimulating the economy. And we are seeing the UK government take similar actions.

Lucrative markets

Meanwhile, Avenue Capital manages total assets worth over $9bn. In the past it has invested in struggling US brands such as Macy’s and J.C. Penney. Lasry explained the company can issue senior debt that takes priority when a company begins to pay off its loans, or cede ownership. “So, you’ll either get paid out, or you’re going to end up owning the equity of this company”.

Sounds great! And I reckon we can use a similar investing theme using shares. Indeed, it seems to me that as the coronavirus crisis evolves we are getting more information about which companies are financially robust. For example, the housebuilding sector appears to have shrugged off the worst the crisis has thrown at it.

And other sectors are performing well too. So rather than helping distressed companies with loans, we can hunt financially strong companies with distressed share prices. And with help from all the fiscal stimulus being applied to economies by governments, we could see underlying trading in these businesses recover and thrive.

Indeed, I reckon Lasry and others who describe the once-in-a-lifetime opportunity they see in the markets today could prove to be correct. Either way, I reckon it’s a great time to invest in shares with a long-term investment horizon in mind.