No beef with Obama for hedge funds: Avenue's Lasry

NEW YORK Fri Nov 30, 2012 3:08pm EST

Marc Lasry, chairman and CEO and co-founder, Avenue Capital Group takes part in a panel discussion titled ''Alternative Investments: Where Do the Next Great Returns Lie?'' at the Milken Institute Global Conference in Beverly Hills, California May 2, 2012. REUTERS/Fred Prouser

Marc Lasry, chairman and CEO and co-founder, Avenue Capital Group takes part in a panel discussion titled ''Alternative Investments: Where Do the Next Great Returns Lie?'' at the Milken Institute Global Conference in Beverly Hills, California May 2, 2012.

Credit: Reuters/Fred Prouser

NEW YORK (Reuters) - There may not be a lot of hedge fund managers attending President Barack Obama's second Inauguration in January, but count on Avenue Capital Group's Marc Lasry to be there.

In an industry where most big money managers heavily supported Republican presidential candidate Mitt Romney, Lasry was one of the few prominent managers bucking the trend and raising money for Obama's re-election.

Then again, that may not be too surprising since Lasry, 53, is a long-time backer of Democratic candidates. Chelsea Clinton, the daughter of former President Bill Clinton, worked for a time for Lasry's $12 billion fund, which focuses on distressed debt.

But Lasry said he's still puzzled that so many managers who call themselves Democrats switched allegiances from Obama to Romney this time around, especially given the $2 trillion hedge fund industry largely thrived under Obama.

"It's kind of shocking," said Lasry in an interview with ReutersTV for the Reuters Global Investment Outlook 2013 Summit. "Anyone on Wall Street has done very well since the president came into office."

But Lasry, whose midtown Manhattan office is adorned with several photos of him with Democratic politicians, said people in the hedge fund industry were upset with some of the "rhetoric" from Obama about the banks and rich needing to pay more. Lasry never really understood that anger and hopes it doesn't stem from Obama's campaigning on a plan to raise taxes on the rich.

"I hope it wasn't about higher taxes," said Lasry, who is also an avid comic book collector, a passion he's had for years.

Beyond the issue of rhetoric, Lasry said he does understand why the U.S. business community remains cautious when it comes to spending money on capital expenditures and new hiring.

He said there's nothing "driving the economy" and corporate executives want to make sure the nascent signs of a pick-up in housing and consumer confidence are lasting.

"The psychology has changed a lot since '08. Today the belief is, "I need to be more careful," said Lasry. "You see that with boards. You see that with everyone."

Despite recovery and seemingly low corporate default rates, even on high-yield debt, there is still a lot of risk in the system, Lasry said. He notes that 26 percent of the high-yield debt market, or "junk" bonds, is trading at prices that expect a default.

"You still have all this debt that has issues," he said.

Yet all those problems aside, Avenue Capital is pushing into a new line of business, which involves lending money to small- and mid-size businesses that the big commercial banks have walked away from. Lasry said the key to success is picking out successful businesses and being able to charge higher-than-normal interest rates because those companies cannot get money elsewhere.

"You're getting massively overpaid for the risk you are taking," said Lasry.

As for those comic books, Lasry says it's a cheaper hobby than collecting art, which is the choice of many of his peers.

But there is one thing Lasry, whose favorite superhero is Batman, has given up. He is no longer attending comic book conventions.

"I used to take my kids," he said. "But after a while they would turn around and say, 'Dad. Seriously. We have to leave'."

(Reporting By Matthew Goldstein; Edited by Jennifer Ablan and Gunna Dickson)

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