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

Even super-rich, successful investors can see a once-in-a-lifetime opportunity in the markets. Here’s how I’d aim to take advantage of it with shares.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »