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“Everything we deal with is significantly cheaper than it was six - 12 months ago.” - Howard Marks

edited July 2022 in Other Investing
(Revised caption):)

The caption above is taken directly from this week’s Barron’s (print). I couldn’t fit it all in, so here’s the exact / full quote from Barron’s: “Today I am starting to behave aggressively. Everything we deal with is significantly cheaper than it was six to 12 months ago.”

Barron’s provides no additional detail, so I linked a reference to Marks’ comment from The Business Insider.

Title: Legendary investor Howard Marks says to snap up cheap assets now, as "waiting for the bottom is a terrible idea" - Story by George Glover

(This post has been substantially revised to clear up any possible confusion)
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Comments

  • edited July 2022
    M* had more details citing MarketWatch (owned by News Corp/NWS, parent of Barron's, WSJ, DJ & Co, etc), https://www.morningstar.com/news/marketwatch/20220628116/oaktrees-howard-marks-is-finding-bargains-i-am-starting-to-behave-aggressively-he-says

    Original/MarketWatch https://www.marketwatch.com/story/oaktrees-howard-marks-is-finding-bargains-i-am-starting-to-behave-aggressively-he-says-11656414153

    "That brings us to our call of the day from a well known voice on Wall Street, Oaktree Capital's founder Howard Marks, who says now's the time for "bargain" hunting follow the market's selloff.

    Marks is best known for his lengthy investment letters, and warnings. In early May he cautioned over bull-market excess, which seems as prescient as his similar year-earlier warning.

    "Today I am starting to behave aggressively," he told the Financial Times in an interview. "Everything we deal in is significantly cheaper than it was six or 12 months ago."

    The manager said now seems like a "reasonable time to start buying," noting lower prices for such assets as high-yield bonds, mortgage-backed securities and leveraged loans. Oaktree specializes in alternative investment strategies.

    "Things may well go lower. In that case, I hope we'll have the will to buy more. It makes no sense to say: "I'm not going to buy until we reach bottom." We never know when we're at the bottom, and certainly I'm not saying we are today," Marks said."
  • I am in total agreement with Howard Marks. Although our Funds have held significant “dry powder”, we started cautiously putting some to work to buy “money good” credit at 8%-12% opportunities with low duration. I will be discussing in my 2Q letter entitled “Flander’s Field” which I expect to come out in mid month. Bought 29MM of a called/put bond on Friday coming out in 30 days at over 10%. Feel free to reach out to me directly if you want to chat
  • edited July 2022
    Yes - Marks is probably more interested in distressed debt, which is his calling card.

    Knowing his thoughts, however, might give me a bit more confidence to “risk up” slightly in the equity realm. As always, time horizon, tolerance, etc. weigh on any such decision.
  • edited July 2022
    Absolutely..... I hope my moves lately have not been utterly fucked-up. My changes and moves and decisions and choices have been made with micro and macro conditions in mind. If I'm not utterly divorced from what H. Marks has in mind, I might do alright.
  • Marks said he doesn't invest in crypto because assets like bitcoin don't produce any cashflow.

    "Assets that don't have cash flow don't have intrinsic value," he said. "A good part of the value has to be conceptual and future-oriented."
    Mark does emphasize companies with real earning, i.e. quality As Schwab’s Liz Ann Sounders called them. If one has large cash position now is good buying opportunities.
  • indeed.
  • Could be closer to bottom
    Nobody knows

    Hope rally upswings soon

    Ust10, commodities, usdollars have retrieved last few wks
    Whether trend continues we will see

    Dipping small amount slowly
  • I read his letter from May...perfect timing. But its not like that was the only time he warned about valuations...he mentioned the same thing last year.
  • Wasn't Howard Marks gloating in 2021 that although he personally missed the boat on cryptos, his son Andrew, who now manages family accounts, was into cryptos, and that Marks was gaining a new appreciation for Bitcoin, especially because of its limited supply. I thought at the time that must be something when a diehard value guy like Marks started to sing praises of Bitcoin. I think that Marks also mentioned this in one of his essays.
  • @yogibearbull, May be when value guys gloat about BTC was a clue for us to de-risk! Is Howard Marks talking about private credit markets or public markets? I used to read his Chairman letters but have not followed him lately.
  • edited July 2022
    Howard Marks specializes in distressed debt ala junk bonds, bank loans, etc. Over the past several months I have continually read about how junk bonds offer value from various pundits. All the while it is one new low after another for junk bonds. So much so that the first half decline of 14% was the worst first half decline ever for the junk bond market.

    What is particularly ominous is how detached junk bonds have been from equities and Treasuries. Meaning while equities had a vicious bounce a few weeks ago, junk and bank loans just kept making new lows. While Treasuries are having a nice recovery presently still new lows in the risk on credits aka junk and and bank loans. Below is a link to Morgan Stanley’s outlook for junk. Sounds much more objective and reasoned than much of what I have read recently

    https://www.zerohedge.com/markets/morgan-stanley-recession-arrives-will-we-see-surge-corporate-defaults

    Edit: Obviously as with Treasuries recently, these markets can turn on a dime. And junk bonds are notorious for strong recoveries after bear declines. Coming off the 2008 bear market in
    2009 junk had the greatest credit rally of all time rising over 50%.

    Edit: Today’s action in junk bonds so far at least so far not as negative as it may appear. Although down, the junk ETFs are still trading well above Friday’s NAV meaning the open end may be up today.
  • edited July 2022
    From this week’s Barron’s: “Today I am starting to behave aggressively. Everything we deal with is significantly cheaper than it was six to 12 months ago.” - Howard Marks, Oaktree Capital

    There was no accompanying article in Barron’s. The interview they were referencing appears to have been published in the Financial Times. I’m unable to access it.

    I never felt Marks was telling you and me to start buying risky assets. Running a large investment company is much different than levering your family’s life savings.

    Thanks @Junkster for the comments. +1

    I’ll try to draw from original sources in the future. My thoughts are that Marks doesn't customarily dish-out investment advice to others. He runs his own ship and discusses his own methods and philosophy. I think trying to take instruction from him would be difficult. Personally, I love reading and learning about investing. It’s not important to me whether or not “actionable advice” can be gleaned from a source. But, others differ in expectations.
  • edited July 2022
    Link to Oaktree Capital for those interested in investing with Howard Marks

    https://www.oaktreecapital.com/

    (Minimum investment for individuals is generally $100 Million.)
  • edited July 2022
    Oaktree also manages several funds which have lower minimum investment requirements.

    Oaktree Emerging Markets Equity Fund
    OEQIX - $1M min.
    OEQAX - $2.5K min with 4.75% load at Fidelity

    Oaktree Diversified Income Fund (Interval Fund)
    ODIDX - $25K min.

    Vanguard Emerging Markets Select Stock Fund
    VMMSX - $3K min.
    Oaktree manages 25% of the assets (one of four managers).
  • edited July 2022
    Looked for ODIDX. Morningstar doesn't recognize it, although when you type-in the ticker, a drop-down menu appears with the name of the fund. Operation FUBAR again with Morningstar. ..... Barron's doesn't know that ticker, either. WSJ shows a quote. Try to dig any deeper, and you get an error page: 404. ORK! Anyway, thanks for going the extra mile.
  • edited July 2022
    @Crash ,

    Click this link for ODIDX info.
    This is not a recommendation...
  • Interval-funds don't trade on exchanges. From brokers/agents, you can buy them ANYTIME, but redemptions are LIMITED to small % (5%?) at QUARTERLY windows, if that (and at the option/whim of the sponsor)-- like Roach-Motels. That is why quote info on them is sparse. Weekend Barron's has a list on them as "Continuously-Offered" under the CEFs and they are sort of in the no-man land between OEFs and CEFs.
  • Ty

    We have been nibbling little, bought more qqqm voo lcid xlf tna today

    Friends buy lots tech asml tlsa goog Amazon upst soxl
  • Marks is sharp. -- I agree that "nibbling" is in order. But not going in "whole hog".

    Find it curious that in a businessinsider article date June7, he declares "we (Oaktree) are not market timers...(because).. we never sell to prepare for a market decline."

    Well, OK, but if you happen to have material amounts of investable cash lying around before the market sells-off, and then you "buy low" (as he now recommends) that kind of makes one a "market timer". I just think Howard should not try to rhetorically run away from who he is -- from whom most well known investors are. Even Buffett has maintained unusually large amounts of cash underployed for years. He could have just deployed a lot of into collateral-backed S&P futures. Why didn't he? He was timing the market -- in his case by maintaining a mountain of dry powder for a crash he could reasonably predict would happen at some point.

    That's not a criticism of the Sage, simply an observation that the captains of finance engage in the "market timing" which they suggest we little folks should not..

    One more thing re Marks, for those who may be interested. His Oaktree does have a readily available public vehicle, ticker OCSL. It trades every day the stock market is open and pays a fat distribution:


    https://www.oaktreespecialtylending.com/about/investment-strategy

  • Value players always have cash or liquid assets (e.g. large-caps) available for value opportunities. That doesn't make them market-timers.

    My definition of market-timers is different. They are either all in or all out. Others vary on this. I call other styles strategic allocation (with static/fixed allocations, like in traditional 60-40) or tactical allocation (with variable allocations), etc.

    WB has lot of direct cyclical business exposure due to many operating businesses that BRK has. His stock portfolio isn't the only thing he has to worry about. He does have excess cash, but it is not all excess.
  • Marks primary role in the past was managing OAK or Oaktree Capital Management LLC.

    He sold it to Brookfield Asset Management which is publicly traded BAM but has Billions of dollars in other assets, mostly real estate and infrastructure.

    OCSL lists Marks as a co-chairman, but I am not sure if he really is involved day to day. It is hard to figure out if OCSL is a BSD or really is buying distressed debt etc.

    I would tread carefully
  • edited July 2022
    d
  • "It is hard to figure out if OCSL is a BSD or really is buying distressed debt etc."

    What does BSD stand for?
  • Big Stupid Deal?
  • edited July 2022
    I think the question was meant to be "is OCSL a BDC".

    Below is the company's description, from a source deemed to be reliable..


    Oaktree Specialty Lending Corporation is a specialty finance company. The Company is providing customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company provides flexible financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. The company acts as a business development company. The Company serves various industries, including application software, multi-sector holdings, data processing and outsourced services, pharmaceuticals, biotechnology, health care services, specialized finance, personal products, property and casualty insurance, industrial machinery, internet and direct marketing retail, construction and engineering. The Company’s investment advisor is Oaktree Capital Management, L.P.
  • edited July 2022
    https://www.marketbeat.com/stocks/NASDAQ/OCSL/chart/

    Thanks for the tip. I like companies that can mint money out of thin air. Will have a look at this one,

    The -10% YTD doesn’t trouble me. I gravitate to stuff that’s down. Suspect it’s holding up better than TRP or BlackRock.
  • edited July 2022
    Old_Joe said:

    Big Stupid Deal?

    Naw …

    The “B.S.” part should be obvious.:) I’m not sure what the “D” means. What was the name of that guy who used to post under 4 or 5 different identities? Dilbert? Dennis?

  • Sorry I meant BDC. Most BDCs ( ie MAIN) are down 10% or more anticipating bankruptcy of some of their companies with a big recession.

    Not sure again how much Marks is really involved.
  • Junkster said:

    Howard Marks specializes in distressed debt ala junk bonds, bank loans, etc. Over the past several months I have continually read about how junk bonds offer value from various pundits. All the while it is one new low after another for junk bonds. So much so that the first half decline of 14% was the worst first half decline ever for the junk bond market.

    What is particularly ominous is how detached junk bonds have been from equities and Treasuries. Meaning while equities had a vicious bounce a few weeks ago, junk and bank loans just kept making new lows. While Treasuries are having a nice recovery presently still new lows in the risk on credits aka junk and and bank loans. Below is a link to Morgan Stanley’s outlook for junk. Sounds much more objective and reasoned than much of what I have read recently

    https://www.zerohedge.com/markets/morgan-stanley-recession-arrives-will-we-see-surge-corporate-defaults

    Edit: Obviously as with Treasuries recently, these markets can turn on a dime. And junk bonds are notorious for strong recoveries after bear declines. Coming off the 2008 bear market in
    2009 junk had the greatest credit rally of all time rising over 50%.

    Edit: Today’s action in junk bonds so far at least so far not as negative as it may appear. Although down, the junk ETFs are still trading well above Friday’s NAV meaning the open end may be up today.

    Probably much ado about nothing but have a 7% position in VWEHX and hoping to increase as 7% barely moves the needle. Liked how on Tuesday intraday with the Dow down 600 points the cash junk market was up. First time in many a moon I had seen that type of intraday divergence. Junk had a decent week but 2022 has been a year of fake out rallies so buyer beware.
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