On Sept. 18, Howard Marks (Trades, Portfolio) appeared on Bloomberg. Marks is the chairman of Oaktree Capital (NYSE:OAK) and the author of great investment books like "Mastering the Market Cycle." Here's a summary of what he said.
No bubble
According to Marks, we are not in a bubble. We are not going into a bubble. There is no reason to believe in a panic coming. There has been a great amount of debt issued. Debt issuance is risky. When that debt slides there will be great opportunities.
Opportunities are very few today, Marks said. Investing in distressed debt is a struggle today. The economy is too good, and capital markets are too generous. It would be misleading to viewers to say there are opportunities, he said. He sees no place to put money into distressed debt.
Oaktree isn’t calling very much committed capital.
China
China has troubled companies, according to Marks. If you can buy the loans, that can be interesting. The question is, will you get your money? Does the law apply? Oaktree thinks so. But they are investing small amounts of cash and testing the waters to see whether their claims hold up over time.
Top 5 positions
Oaktree Capital is a specialized distressed credit investor. It does hold shares because it runs a few other strategies and also retains bonds through bankruptcy that end up turning into equity holdings. In addition, a 13-F filing doesn't show foreign equities or bonds. Its five largest equity positions have changed in only one spot. NMI Holdings (NMIH) has been replaced by a put option on the S&P 500 (SPY, Financial). Interestingly, this positioning betrays a more bearish outlook than Marks revealed in the Bloomberg interview.
| VST | Â | Vistra Energy Corp | Utilities - Independent Power Producers | 13,108.19 | 28,151,399 | 637,347 | +17.05% | 15.25 | +2.22% | 5.73 | +12.26% | +17.67% |
| TRMD | Â | TORM PLC | Transportation & Logistics | 622.45 | 47,600,172 | 413,978 | 0% | 9.90 | 0% | 9,916.70 | -5.78% | +44.13% |
| SBLK | Â | Star Bulk Carriers Corp. | Transportation & Logistics | 1,003.03 | 37,413,697 | 361,043 | +5.74% | 8.64 | +0.47% | 39.93 | +39.56% | +19.26% |
| ALLY | Â | Ally Financial Inc | Credit Services | 13,633.31 | 10,943,541 | 339,140 | -1.79% | 8.11 | -0.14% | 2.80 | +19.62% | +55.69% |
| SPY PUT | Â | SPDR S&P 500 ETF Trust | Â | 275,877.42 | 810,000 | 237,330 | 0% | 5.68 | 0% | 0.09 | +2.20% | +20.10% |
Table: GuruFocus Marks' portfolio
Disclosure: No positions.Â
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