Retail

Distressed asset specialist Marc Lasry: 'We're short retail'

Marc Lasry: Opportunity in distressed retail sector
VIDEO2:3302:33
Marc Lasry: Opportunity in distressed retail sector

The issues facing retailers are "just too big," and those stocks should see more downside, the billionaire co-founder of Avenue Capital told CNBC on Wednesday.

"We're short retail," Marc Lasry said, declining to answer a direct question about whether he's short Sears. "I don't know if my compliance department will allow me to" say either way.

Shares of Sears were tanking about 13 percent Wednesday morning, a day after the troubled retailer warned about its ability to stay afloat.

The Sears catalog was an emblem of the post-World War II consumer boom in the United States, but the company has been unable to adjust the changing retail landscape and rising competition from Wal-Mart and Target, not to mention Amazon.

"The issues you're having on the retail side [overall] are just too big," Lasry said. "You're going to see a lot of equity value go down."

"You'll have value to these companies, but it's going to be a lot less than people think. So therefore you want to be in that debt," argued the chairman and CEO of Avenue Capital, which has about $10.7 billion in assets under management.

Major investment companies can make a lot of money betting on the debt of companies that have filed for bankruptcy or are likely to file. If the once-troubled company were able to emerge from bankruptcy, then the holder of the debt could see value soar.

In Wednesday's "Squawk Box" appearance, Lasry also talked about the overall stock market. While standing by his January prediction on CNBC for a 10 percent gain in the this year, that the Trump rally could falter in 2018 as hopes for 3 percent GDP fail to turn into reality.

— Reuters contributed to this report.

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