Oaktree Capital Management - Firm Overview

Firm Overview

With headquarters in Los Angeles, the firm has over 650 employees and offices in 13 cities worldwide (Los Angeles, London, New York, Hong Kong, Stamford (Connecticut), Tokyo, Luxembourg, Paris, Frankfurt, Singapore, Seoul, Beijing and Amsterdam).

Investment philosophy

Oaktree has a value-oriented investment philosophy, emphasizing risk-control, consistency and specialization, with a focus on opportunities that offer a margin of safety. On November 12, 2011 the Financial Times said of Oaktree’s approach: “the heart of risk management Oaktree-style, with its emphasis on living to fight another day, is simple. Oaktree doesn’t use leverage and eschews overly complicated hedging strategies.” The firm specializes in off-the-beaten-path and contrarian investments, and favors companies with tangible assets. The firm's motto is “if we avoid the losers, the winners will take care of themselves.”

Investment focus

Oaktree invests across the capital structure, with an emphasis on senior debt in companies and markets where it has what it calls a “knowledge advantage.” Distressed or otherwise ailing companies, according to Oaktree, provide such opportunities. The company’s chairman, Howard Marks, has been described as “one of the savviest investors in the world,” and is known in the investment community for letters to investors called the "Oaktree memos”.

Since its 1995 formation, Oaktree has become the largest distressed-debt investor in the world. In 2008, it raised $10.9 billion for what was the largest-ever distressed debt fund, its Opportunities Fund VIIb. As reported in The Washington Post on June 26, 2011, Oaktree’s 17 distressed-debt funds (which do not use leverage) have averaged annual gains of 19% after fees for the past 22 years.

In addition to credit investments in distressed debt and high-yield bonds, Oaktree also invests in areas such as private equity, real estate and listed equities. In recent years, the company has expanded its real estate activities.

Investor-base

Oaktree’s investor-base primarily includes pension plans (global and U.S.), endowments and foundations, and sovereign wealth funds. 100 of the 300 largest global pension plans, 75 of the 100 largest U.S. pension plans, 39 state pension plans, 312 endowments and foundations, and 10 sovereign wealth fund nations. According to the Wall Street Journal, Oaktree has “long been considered a stable repository for pension-fund and endowment money.”

The company’s distressed-debt funds are often over-subscribed, and in 2010 Oaktree turned down potential investors due to self-imposed limits on fund size. By law, clients are required to be so-called accredited investors, however, sub-advisory relationships with mutual funds such as The Vanguard Group and Russell Investment Group provide smaller investors access to Oaktree’s portfolio managers.