Howard Marks
WATCHOaktree Capital Management
The greatest investment thinker/writer alive with unmatched transparency through his memos, but primarily a credit/distressed investor whose 13F equity holdings are not useful for our public equity approach.
Classic Value Investors
Score Breakdown
Investment Philosophy & Portfolio Style
Philosophy
Marks is famous for his concept of 'second-level thinking' — going beyond surface analysis to understand what consensus expectations are and where they might be wrong. Core principles: (1) Risk control is the foundation — the goal is asymmetric returns (participate in gains, limit losses). (2) Market cycles are inevitable and understanding where you are in the cycle is critical. (3) The relationship between price and value determines risk, not asset quality alone. (4) Contrarian thinking is essential but not sufficient — you have to be contrarian AND right. (5) 'You can't predict, you can prepare.' (6) Focus on 'buying well' rather than 'buying good' — even the best company is a bad investment at the wrong price. (7) Patient, disciplined, and willing to accept periods of looking foolish. His memos, which he has been writing since 1990, are among the most respected writings in finance and focus heavily on market psychology, risk, and cycles rather than specific stock picks.
Portfolio Style
Oaktree's primary focus is distressed debt, high-yield bonds, and credit — NOT public equities. The firm's equity 13F filings are a small part of total operations. Oaktree runs over a dozen strategies including distressed debt, high-yield bonds, emerging market debt, real estate, private equity, infrastructure, and convertible securities. The 13F equity portfolio tends to be moderately diversified with 40-80+ positions, many of which are residual equity holdings from distressed debt conversions (e.g., companies emerging from bankruptcy where debt was converted to equity). Holding periods in the credit strategies can be 3-5 years; equity holdings from conversions are often sold opportunistically. Recent 13F holdings have included T-Mobile, various energy companies, and positions resulting from restructurings.
Background
Howard Marks (b. 1946) is the co-founder and co-chairman of Oaktree Capital Management, which he founded in 1995. He holds a B.S. in Finance from Wharton and an MBA from the University of Chicago. Before Oaktree, he spent 16 years at Citicorp (now Citigroup) where he launched their high-yield bond and distressed debt businesses, then was a partner at TCW Group. Oaktree manages approximately $190+ billion in AUM (as of 2024), making it one of the world's largest alternative investment managers. The firm went public in 2012 and was acquired by Brookfield Asset Management in 2019, though Marks and co-founder Bruce Karsh continue to run investments. Marks is the author of 'The Most Important Thing: Uncommon Sense for the Thoughtful Investor' (2011) and 'Mastering the Market Cycle' (2018).
Track Record
Oaktree's flagship distressed debt funds have generated approximately 20%+ gross returns annualized since inception, with remarkably low loss rates. The firm's track record is built on credit, not equity — they excel in buying distressed and defaulted debt at deep discounts and either holding to recovery or converting to equity through restructuring. During the 2008-09 financial crisis, Oaktree deployed $6+ billion at the market bottom and generated extraordinary returns. However, Oaktree's equity returns are harder to track as they are not the firm's primary strategy. Marks himself acknowledges that in strong bull markets, their conservative approach underperforms, but over full cycles, the risk-adjusted returns are exceptional.
Notable Holdings
Oaktree's notable investments are primarily in credit, not equity: major positions in distressed debt during the 2008-09 crisis, investments in Lehman Brothers claims, Tribune Company debt, Energy Future Holdings, various oil and gas restructurings. In equities (via 13F), holdings have included T-Mobile, various post-restructuring equity positions, and opportunistic public equity investments. The firm's most famous trades are in the credit/distressed space — buying bonds at 20-50 cents on the dollar during crises and recovering par value or converting to equity.
Transparency & Integrity
Transparency(Score: 10/10)
Exceptionally high transparency. Marks has written 100+ investment memos since 1990, all freely available on Oaktree's website. These memos are among the most widely read and respected pieces of investment writing in the world. Warren Buffett has said 'When I see memos from Howard Marks in my mail, they're the first thing I open and read.' Marks has also written two excellent books, gives frequent interviews and lectures, and is very open about his thinking process, mistakes, and market views. He is arguably the most transparent and educational major investor alive today.
Integrity(Score: 9/10)
Very high integrity. Marks and co-founder Bruce Karsh have significant personal capital invested in Oaktree's funds. The firm has a strong culture of investor alignment. No major scandals or regulatory issues. Marks is consistently honest about what he doesn't know, the limitations of his approach, and periods when his views were wrong. The Brookfield acquisition raised some questions about whether Marks would step back, but he has remained actively involved in investment decisions and memo-writing. Marks has been forthright about the challenge of managing $190B+ and the impact of AUM on returns.
Relevance to Us
Moderate alignment. Marks' philosophy of risk control, margin of safety, and contrarian thinking aligns well with our approach. His writings on market psychology and cycles are invaluable for any investor. However, Oaktree is primarily a credit/distressed debt shop, not a public equity investor — their 13F is not particularly useful for generating equity investment ideas. The firm manages $190B+, which limits the types of investments they can make. Marks himself is more of a thinker/writer about investing than a stock-picker — his value is in his frameworks and mental models rather than specific positions to follow.