Howard Marks (investor) explained

Howard Marks
Birth Place:New York City, U.S.
Alma Mater:University of Pennsylvania (BS)
University of Chicago (MBA)
Occupation:Co-founder and co-chairman of Oaktree Capital Management
Spouse:Nancy Freeman Marks
Children:2

Howard Stanley Marks (born 1946) is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. In 2022, with a net worth of $2.2 billion, Marks was ranked No. 1365 on the Forbes list of billionaires.[1]

Marks's essays, called "memos", are widely admired in the investment community. They detail his investment strategies and insight into the economy and are posted publicly on the Oaktree website. He has also published 3 books on investing.[2] According to Warren Buffett, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."

Marks focuses on risk management and says that investors should set investment strategy according to their personal situations and ask themselves whether they worry more about the risk of losing money or the risk of missing an opportunity.[3] Marks believes that it is hard to gain an investment advantage through research since so many smart people are doing it already; the ways to get an advantage are through better inferring the consequences implied by current company data, managing the psychology of investing, and assessing the present stage of the business / market cycle. He hopes to have average returns during a bull market, while minimizing losses during bear markets due to his belief that losses do more harm than any benefit investors obtain from gains. Marks does favor using market timing strategies to have cash available to be invested during a downturn.[4] Marks notes that it is important for investors to admit what they don't know instead of believing something is certain. He aims for a "high batting average" over "home runs".[5]

Funds led by Marks have produced long term returns net of fees of 19% per year. Investors are primarily pension funds and sovereign wealth funds.

Early life and education

Marks was born in 1946 and raised in Queens, New York.[6] [7] Although his family was ethnically Jewish, he was raised as a Christian Scientist.[8] He attended the Wharton School of the University of Pennsylvania[9] for undergraduate studies where he was a member of Pi Kappa Alpha fraternity. He graduated cum laude in 1967 with a major in finance and a minor in Japanese Studies.[7] In 1969, at age 23, he earned a Master of Business Administration in Accounting and Marketing from the University of Chicago Booth School of Business where he won the George Hay Brown Prize.[10] In 1975 he became a CFA charterholder.[11]

Career

Citicorp

From 1969 until 1978, Marks worked at Citicorp, first as an equity research analyst and then as the company's Director of Research.[12] From 1978 to 1985, he served as a Vice President, as well as a senior portfolio manager overseeing convertible and high-yield debt.[10] Citibank allowed him to move to Los Angeles in 1980 to manage a high-yield fund. He had met Michael Milken in 1979 at Century City and thought Milken's operation would make a good case study for Harvard Business School.[13]

TCW Group

In 1985, Marks joined TCW Group where he led the groups that were responsible for investments in high-yield debt and convertible securities, and in 1988 he and Bruce Karsh organized one of the first distressed debt funds from a major financial institution. In 1995, he, Karsh, and 3 others decided to leave to start their own firm and petitioned TCW to let them continue managing the funds they managed at TCW, giving TCW a portion of the management fees;[14] when TCW refused, the 5 partners left the company and founded Oaktree Capital Management in Los Angeles.[15] [16] [17] [18]

Oaktree

After being founded in 1995, Oaktree grew rapidly, focusing on high-yield debt, distressed debt, and private equity.[17]

During the financial crisis of 2007–08, Oaktree raised $10.9 billion, the largest distressed debt fund in history, to buy distressed assets, which "paid off richly for his investors".[17]

In April 2012, Oaktree became a public company via an initial public offering on the New York Stock Exchange, raising $380 million by selling 8.84 million shares for $43 each.[16]

In March 2019, Brookfield Asset Management acquired 62% of Oaktree. Marks and other members of Oaktree own 38% of the company and have full control of Oaktree's day-to-day operations.[19]

Organizations

From 2000 to 2010, he chaired the Trustees' Investment Board at The University of Pennsylvania.[10] He is a member of the New York Society of Security Analysts and chairs the Investment Committees of the Metropolitan Museum of Art, where he is a trustee, and the Royal Drawing School (London).[10]

Personal life

Marks' first marriage ended in divorce. He has one biological son with his second wife Nancy (née Freeman), who runs the Marks family office, Freemark Partners, and one step-daughter from Nancy's prior marriage.

Philanthropy

In 1992, Marks created the Howard S. Marks Terms Scholarship to provide renewable scholarships to undergraduates at the University of Pennsylvania. In 2009 he endowed the Marks Family Writing Center at the university.

In March 2023, Nancy and Howard Marks made a $5 million gift to University of California, Los Angeles to endow a faculty chair held by the Vice Chair of Women’s Health Research in the department of obstetrics and gynecology at the David Geffen School of Medicine at UCLA. The gift will provide resources to help ensure that women’s health research efforts at UCLA Health are led by an eminent physician-scientist. [20]

Residences

In 2010, Marks bought an oceanfront property in East Hampton for $30 million.[21] In May 2012, he and his wife purchased a duplex unit at 740 Park Avenue for $52.5 million.[22] In 2013, Marks sold his mansion in Malibu, California for $75 million.[23] In 2015, he purchased a house in Beverly Hills for $23.7 million.[24] In 2017, he purchased the house next door to his house in Beverly Hills for $9.7 million.[25] In 2019, he purchased parcels in Amagansett, New York, near his East Hampton property, for $35 million.[26]

Political affiliation

Marks is a member of the Democratic Party and has been critical of the economic policy of Donald Trump.[27] In 2016, he contributed over $200,000 to the Hillary Victory Fund and similar organizations.[28] However, he has criticised the tax plan proposed by Representative Alexandria Ocasio-Cortez (a Democrat representing part of New York), saying "a great deal of America’s economic progress has resulted from people’s aspiration to make more and live better".[29]

Books

Notes and References

  1. Web site: Forbes. Forbes.
  2. News: The Best Of Howard Marks: Advice From A Legendary Investor . Ben . Walsh . . December 21, 2011 . March 4, 2020 . April 9, 2017 . https://web.archive.org/web/20170409222326/http://www.businessinsider.com/the-best-of-the-last-5-years-of-howard-marks-letters-2011-12?op=1 . live .
  3. News: Investing: 'not a game, not a hobby' . Ye . Zhen . . November 14, 2013 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023150/https://archive.shine.cn/business/biz-commentary/Investing-not-a-game-not-a-hobby/shdaily.shtml . live .
  4. News: Howard Marks On Business Cycles And The Option Value Of Cash . Erik . Kobayashi-Solomon . . September 14, 2018 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023151/https://www.forbes.com/sites/erikkobayashisolomon/2018/09/14/howard-marks-on-business-cycles-and-the-option-value-of-cash/ . live .
  5. News: Howard Marks established Oaktree as a leader in distressed debt . . October 29, 2012 . March 5, 2020 . January 24, 2015 . https://web.archive.org/web/20150124171500/http://www.pionline.com/article/20121029/PRINT/310299994/howard-marks-established-oaktree-as-a-leader-in-distressed-debt . live .
  6. News: Espinoza . Javier . October 17, 2018 . Howard Marks, the ultimate bargain hunter . . subscription . https://archive.today/20181018090307/https://www.ft.com/content/8290cfe4-58bc-32c2-bff8-f71fbf98fb6b . October 18, 2018 . live.
  7. News: Biggest Distressed Debt Investor Marks Europe With 19% Returns . Gillian . Wee . . June 17, 2011 . subscription . 2020-03-04 . 2020-04-09 . https://web.archive.org/web/20200409113241/https://www.bloomberg.com/news/articles/2011-06-17/biggest-distressed-debt-investor-marks-europe-after-22-years-of-19-return . live .
  8. News: Saving the mother tongue from a dusty silence . . Howard . Marks . December 26, 2004 . subscription . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023147/https://www.latimes.com/archives/la-xpm-2004-dec-26-bk-marks26-story.html . live .
  9. News: Mott . Amanda . Howard and Nancy Marks endow the Marks Family Center for Excellence in Writing . 26 September 2022 . Penn Today . May 19, 2020 . en.
  10. Web site: Biography: Howard Marks . . 2016-09-20 . 2016-11-29 . https://web.archive.org/web/20161129083428/https://www.oaktreecapital.com/people/bio/howard-marks . live .
  11. Web site: Member Directory.
  12. Web site: Mastering the Market Cycle: Getting the Odds on Your Side—A Conversation between Howard Marks, CFA, and CFA Society Portland . 10 January 2019 . 4 March 2020 . 4 March 2020 . https://web.archive.org/web/20200304023152/https://www.cfainstitute.org/en/research/multimedia/2019/mastering-the-market-cycle-howard-marks-conference-collection . live .
  13. Book: Bruck . Connie . The Predators' Ball . 1989 . Penguin . New York . 0140120904 . 57, 277.
  14. News: Petruno . Tom . 5 Key Officers to Leave TCW, Form New Firm : Securities: Their departure is likely to spark a heated battle for TCW's employees and clients. . 1 May 2020 . Los Angeles Times . March 16, 1995.
  15. News: 5 Key Officers to Leave TCW, Form New Firm . Tom . Petruno . . subscription.
  16. News: Oaktree's Marks Says Share Sale Was Humbling Experience . Devin . Banerjee . Sheila . Dharmarajan . . May 7, 2012 . subscription . 2020-03-04 . 2020-03-04 . https://web.archive.org/web/20200304023147/https://www.bloomberg.com/news/articles/2012-05-07/oaktree-s-marks-says-share-sale-was-humbling-experience . live .
  17. News: Howard Marks: bonds are back in fashion . Mina . Kimes . . March 31, 2011 . March 4, 2020 . March 17, 2016 . https://web.archive.org/web/20160317133926/http://archive.fortune.com/2010/05/07/pf/howard_marks_extended.fortune/index.htm . live .
  18. Web site: Forbes: the World's Billionaires - Howard Marks . . 2017-08-31 . 2018-12-25 . https://web.archive.org/web/20181225045518/https://www.forbes.com/profile/howard-marks/ . live .
  19. Brookfield to Acquire 62% of Oaktree Capital Management . . March 13, 2019 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/https://www.globenewswire.com/news-release/2019/03/13/1752577/0/en/Brookfield-to-Acquire-62-of-Oaktree-Capital-Management.html . live .
  20. Web site: $5 million gift from Nancy and Howard Marks endows chair in women's health research at UCLA .
  21. News: Deutsch sells Hamptons property for $30M . . October 12, 2010 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/http://lmdev.therealdeal.com/2010/10/12/deutsch-sells-hamptons-property-for-30m/ . live .
  22. News: Howard Marks Spends Big at 740 Park Avenue . Mark . David . . May 15, 2012 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/https://variety.com/2012/dirt/real-estalker/howard-marks-spends-big-at-740-park-avenue-1201233426/ . live .
  23. News: Billionaire Howard Marks Sells $75 Million Malibu Mansion In Record-Breaking Deal . Morgan . Brennan . . January 7, 2013 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/https://www.forbes.com/sites/morganbrennan/2013/01/07/billionaire-howard-marks-sells-75-million-malibu-mansion-in-record-breaking-deal/ . live .
  24. News: Nick Vanoff Estate Sells to Billionaire Financier . Mark . David . . June 16, 2015 . March 5, 2020 . May 25, 2018 . https://web.archive.org/web/20180525165822/http://variety.com/2015/dirt/real-estalker/nick-vanoff-estate-sells-to-billionaire-financier-1201518757/ . live .
  25. News: Billionaire Howard Marks spends nearly $10 million on the little house next door . James . McClain . . October 21, 2017 . March 5, 2020 . October 27, 2020 . https://web.archive.org/web/20201027155336/https://login.wikimedia.org/wiki/Special:CentralAutoLogin/checkLoggedIn?type=script&wikiid=enwiki&proto=https . live .
  26. News: Oaktree Capital's Howard Marks buys 4 Amagansett parcels for $35M . . May 23, 2019 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/https://therealdeal.com/tristate/2019/05/23/oaktrees-howard-marks-buys-4-amagansett-parcels-for-35m/ . live .
  27. News: Billionaire Investor Howard Marks Slams Trump's Economic Policies for 'Ignoring Economic Reality' . Derek . Xiao . . August 18, 2016 . March 4, 2020 . March 4, 2020 . https://web.archive.org/web/20200304023149/https://www.forbes.com/sites/derekxiao/2016/08/18/billionaire-investor-howard-marks-slams-trumps-economic-policies-for-ignoring-economic-reality/ . live .
  28. Web site: Howard Marks Political Campaign Contributions 2016 Election Cycle . 2020-03-04 . 2019-04-18 . https://web.archive.org/web/20190418195341/https://www.campaignmoney.com/political/contributions/howard-marks.asp?cycle=16 . live .
  29. News: Billionaire Howard Marks on Ocasio-Cortez's tax plan: 'People at the bottom won't have as many at the top to resent' . Shawn . Langlois . . January 31, 2019 . 2020-03-05 . 2019-02-23 . https://web.archive.org/web/20190223194723/https://www.marketwatch.com/story/billionaire-howard-marks-like-many-other-billionaires-has-a-real-problem-with-ocasio-cortezs-plan-to-tax-the-rich-2019-01-31 . live .
  30. Book: Marks, Howard . The Most Important Thing: Uncommon Sense for the Thoughtful Investor . . 2011 . 978-0231153683.
  31. Book: Marks, Howard . The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor . Columbia Business School Publishing . January 15, 2013. 9780231162845 .
  32. Book: Marks, Howard . Mastering the Market Cycle: Getting the Odds on Your Side . October 2, 2018 . Houghton Mifflin Harcourt. 9781328480569 .

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