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Avenue Capital Group is a New York -based multi-strategy hedge fund founded by Marc Lasry and Sonia E. Gardner. Avenue Capital has approximately $13.0 billion AUM as of May 31. The fund focuses on distressed and undervalued debt and equity opportunities in the U.S., Asia and Europe. Lasry received his B.A in history from Clark University and a J.D. from New York Law School. Lasry is also one of the highest paid hedge fund managers in 2010 (here is the complete list).

Avenue Capital had 16 securities in its 13F portfolio valued at $1.05 billion at the end of March. Of its 16 holdings, only six yielded positive returns this quarter. Avenue Capital sold out US Airways Group (LCC), Abitibibowater (ABH) and Clearwire Corp (CLWR) shares during the first quarter of 2011.

Here is how Avenue Capital’s top picks performed since the end of March 2011:


Value (Millions)

Since Mar 31,2011

Magnachip Semiconductor (NYSE:MX)



Citigroup Inc (NYSE:C)



CIT Group Inc (NYSE:CIT)



Lear Corp (NYSE:LEA)



T R W Automotive (NYSE:TRW)



Spectrum Brands (NYSE:SPB)



I F M Investments Ltd (NYSE:CTC)



Tenet Healthcare Corp (NYSE:THC)



Dynegy Inc Del (NYSE:DYN)



Verso Paper Corp (NYSE:VRS)



Central European Media (NASDAQ:CETV)



Navistar International (NYSE:NAV)



Dryships Inc (NASDAQ:DRYS)



Royal Bank Scotland (NYSE:RBS)



Dryships Inc Cl 2 (DRYS)



Chemtura Corp (NYSE:CHMT)



Value Weighted Return of Top Holdings






Lasry’s 13F portfolio has lost 6.5% since the end of first quarter 2011, vs. a 1.9% gain for the SPY. MagnaChip Semiconductor was Lasry’s biggest investment at the end of March 2011. MX has lost 16.6% since then, underperforming the SPY's 1.9% return. Lasry has $278 million invested in MX. MagnaChip provides analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip, with its 30-year operating history, has 2,730 novel registered patents and 760 pending novel patent applications. MagnaChip recently traded at $11.21 and has a P/E ratio of 7.8. The stock has a market cap of $440 million. MagnaChip has $194.2 million cash and $250 million long term debt. According to the Associated Press, the company filed for Chapter 11 bankruptcy protection in June 2009 and exited bankruptcy with less debt and a new board of directors in November. Currently Avenue Capital is the largest shareholder with a 52 percent stake in the company.

Citigroup was Lasry’s second biggest investment at the end of March 2011. Citigroup has lost 4.9% since then. Lasry has $252 million invested in Citigorup. The stock has a market cap of $22.7 billion and P/E ratio of 13.7. There were 96 hedge funds with bullish positions on Citigroup’s stock price at the end of March. These 96 hedge funds collectively had $9.9 Billion in Citigroup. John Paulson’s Paulson & Co. had more than $1.8 Billion in C. (See Paulson’s largest stock holdings here.)

CIT Group has gained 1.9% since March. Lasry had nearly $186 million invested at the end of March. CIT recently traded at $43.35 and has a P/E ratio of 19.8. The stock has a market cap of $8.7 billion. Bruce Berkowitz’ Fairholme and Howard Marks’ Oaktree Capital Management had the largest positions in this stock at the end of March. (See Berkowitz’ largest stock holdings here.)

Lear Corp has gained 11.2% since March, outperforming the SPY by a large margin. Lasry had nearly $92 million invested at the end of March. LEA recently traded at $54.61. The stock has a market cap of $5.7 billion and P/E ratio of 11.1.

Hedge funds occasionally underperform the market. Paulson is going through a similar phase. We believe Avenue Capital’s top stock picks will outperform the market over the long term. We will keep you posted about his stock picks and performance.

Disclosure: I am long C.

Source: Avenue Capital's Favorite Stock Picks