Oaktree Capital Management
|Traded as||NYSE: OAK|
|Founders||Howard Marks, Bruce Karsh, Steve Kaplan, Larry Keele, Richard Masson, Sheldon Stone|
|Headquarters||Los Angeles, California, USA|
Number of locations
(Co-Chairman and CIO)
|AUM||US$101 billion (as of December 31, 2016)|
Oaktree Capital Management is an American global asset management firm specializing in alternative investment strategies. It is the largest distressed investor in the world, and one of the largest credit investors in the world. Oaktree emphasizes an opportunistic, value-oriented, and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing (including private equity and special situations), convertible securities, real estate and listed equities.
As of December 31, 2016, the company managed $101 billion for its clientele which includes 75 of the 100 largest U.S. pension plans, as well as public funds, foundations, corporate and insurance companies, endowments, and sovereign wealth funds. The company’s co-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”.
The firm was co-founded in 1995 by a group who had formerly worked together at the TCW Group starting in the 1980s. Oaktree quickly established a reputation in the high-yield and distressed-debt markets. On April 12, 2012, Oaktree Capital Group LLC became listed on the NYSE: OAK. As of December 31, 2016 it has over 900 employees and 18 offices in Los Angeles, where it is headquartered, London, New York City, Hong Kong, Stamford (Connecticut), Tokyo, Luxembourg, Paris, Frankfurt, Singapore, Seoul, Beijing, Amsterdam, Dubai, Houston, Shanghai, and Sydney.
- 1 Firm overview
- 2 History
- 3 Investment funds
- 4 Assets
- 5 Current investments
- 6 See also
- 7 References
- 8 Further reading
- 9 External links
With headquarters in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide (Los Angeles; London; New York City; Hong Kong; Stamford, Connecticut; Tokyo; Luxembourg; Paris; Frankfurt; Singapore; Seoul; Beijing; Amsterdam; Dubai; Houston; Shanghai; and Sydney).
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 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.”
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.
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.
Oaktree’s clientele includes 75 of the 100 largest U.S. pension plans, 38 states in the United States, over 400 corporations and/or their pension funds, over 350 university, charitable and other endowments and foundations, 16 sovereign wealth funds and over 350 other non-U.S. institutional investors. 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.
Early years (1995–1999)
Oaktree was founded in 1995 by a group of principals who first joined together at the TCW Group in the mid-1980s to manage high yield bonds, convertible securities, distressed debt, real estate, and principal investments. Within three months of its founding in 1995, “more than 30 TCW clients transferred $1.5 billion in assets to Oaktree.”
Since 1995, Oaktree has created what it refers to as “step-out” strategies, usually coincident with the opening of new offices around the world. Its growth in strategies has largely focused on expanding into European and Asian markets. Between 1997 and 1999, Oaktree created 3 new strategies: Emerging Markets Absolute Return in 1997, European High Yield Bonds in 1999, and Power Opportunities in 1999. Oaktree was one of the first U.S.-headquartered alternative asset managers with dedicated European investment teams focused on credit.
In 2001 Oaktree continued to introduce new "step-out" strategies, starting with Mezzanine Finance. Asia Principal Opportunities (2006) and Asia Special Situations (2007) followed, along with European Principal Investments (2006), U.S. Senior Loans and Value Opportunities (2007), European Senior Loans (2009), Global High Yield Bonds (2010), and Emerging Markets Equities (2011).
In 2005 the Securities And Exchange Commission ordered Oaktree to pay a fine, interest, and disgorge profits after the SEC ruled they had "sold securities short" before the five legal business days after a public offering pricing had gone public. Oaktree was required to put in place policies and procedures to prevent violations in the future.
In 2008, the firm raised $11 billion for their distressed debt fund. In 2009, Oaktree was selected by the U.S. Treasury, along with eight other managers (BlackRock, Invesco, AllianceBernstein and others) to participate in the government’s Public-Private Investment Program (PPIP). At the time of Oaktree’s inclusion in the PPIP program, The New York Times reported: “Howard S. Marks is the sort of financier who Washington hopes will help fix the nation’s tumbledown banks.” Partnering with Oaktree in PPIP are the Inupiat Eskimos of Alaska’s North Slope, whose Arctic Slope Regional Corporation invested some $10 million alongside Oaktree’s PPIP fund. As of December 31, 2016, the Oaktree PPIP Fund, L.P. had a gross return of 28%.
Recent years (2010-present)
- Relationship expansion
In recent years, the company has formed several strategic relationships. In 2009, Oaktree acquired a 22% stake in DoubleLine Capital, a Los Angeles-based investment firm specializing in mortgage-backed fixed income portfolios. In 2011 Oaktree partnered with Sabal Financial Group, a company focusing on the acquisition and valuation of portfolios of real estate loans. Oaktree had been an investor in Sabal’s portfolios since 2009 prior to acquiring a non-controlling equity stake in the company.
Its relationship with Vanguard was expanded in 2011, when Oaktree was selected as one of four firms to manage Vanguard’s Emerging Markets Select Stock Fund. In 2010, Oaktree was named one of three advisors to the Russell Global Opportunistic Credit Fund and was selected as a manager for the Credit Suisse (Lux) I Fund in 2011.
- European sovereign-debt crisis
- Other recent funds
According to the company’s published financial results, during the year ended December 31, 2016, Oaktree raised $11 billion for Oaktree Opportunities Funds X and Xb (“Opps X and Xb”). Like its other Opportunities funds, Fund X and Xb will focus on “market pricing inefficiencies resulting from company reorganizations and restructurings, and the senior and secured debt of operationally sound, overleveraged companies in the United States and Western Europe.” New strategies, such as Global High Yield Bonds, Strategic Credit, European Private Debt, Emerging Markets Total Return, Emerging Markets Opportunities, Real Estate Debt, Value Equities, and Real Estate Value-Add were also added to the platform.
- NYSE listing
On April 12, 2012, Oaktree became a publicly traded partnership with shares listed on the NYSE. The company was previously listed on GSTrUE, a private over-the-counter exchange run by Goldman Sachs which officially ceased operations in 2012 after Oaktree, along with Apollo Global Management (in 2011), de-listed and moved to the NYSE.
Oaktree’s current investment activities are divided across six main asset classes: distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Fund structures within each asset class vary, and are organized into closed-end, open-end, or so-called “evergreen” fund types.
Oaktree’s fund offerings are organized into three broad categories based on liquidity and lock-up period:
- Closed-End Funds: Closed-end funds are structured as limited partnerships that have a 10- or 11-year term and have a specified period during which clients can subscribe for limited partnership interests in the fund. Closed-end funds have a three-, four- or five-year investment period.
- Open-End Funds: Commingled open-end funds are structured as limited partnerships that admit clients as new limited partners on an ongoing basis. Unlike close-end funds, these funds do not have an investment period. Capital may be committed to new investments at any time during the fund’s life.
- Evergreen Funds: “Evergreen funds” invest in marketable securities on a long and short basis. Like open-end funds, Oaktree’s evergreen funds accept new capital on an ongoing basis. Clients in evergreen funds are generally subject to a lock-up period of between one and three years.
The following tables list the company’s strategies and funds since inception (including TCW funds directed by Oaktree managers before they left TCW to found Oaktree in 1995):
|TCW Special Credits Fund I, L.P.||Oct-1988||$97|
|TCW Special Credits Fund II, L.P.||Jul-1990||$261|
|TCW Special Credits Fund IIb, L.P.||Dec-1990||$153|
|TCW Special Credits Fund III, L.P.||Nov-1991||$329|
|TCW Special Credits Fund IIIb, L.P.||Apr-1992||$6447|
|TCW Special Credits Fund IV, L.P.||Jun-1993||$394|
|OCM Opportunities Fund, L.P.||Oct-1995||$771|
|OCM Opportunities Fund II, L.P.||Oct-1997||$1,550|
|OCM Opportunities Fund III, L.P.||Sep-1999||$2,077|
|OCM Opportunities Fund IV, L.P.||Sep-2001||$2,125|
|OCM Opportunities Fund IVb, L.P.||May-2002||$1,339|
|OCM Opportunities Fund V, L.P.||Jun-2004||$1,179|
|OCM Opportunities Fund VI, L.P.||Jul-2005||$1,773|
|OCM Opportunities Fund VII, L.P.||Mar-2007||$3,598|
|OCM Opportunities Fund VIIb, L.P.||May-2008||$10,940|
|Special Account A||Nov-2008||$253|
|Oaktree Capital Management Opportunities Fund VIII, L.P.||Oct-2009||$4,507|
|Special Account B||Nov-2009||$1,031|
|Oaktree Capital Opportunities Fund VIIIb, L.P.||Aug-2011||$2,692|
|Oaktree Opportunities Fund IX||Jan 2014||$5,066|
|Oaktree Opportunities Fund X||Jan 2016||$3,243|
|Oaktree Opportunities Fund Xb||TBD||$8,063|
|Global Principal Investments|
|TCW Special Credits Fund V, L.P.||Apr-1994||$401|
|OCM Principal Opportunities Fund, L.P.||Jul-1996||$625|
|OCM Principal Opportunities Fund II, L.P.||Dec-2000||$1,275|
|OCM Principal Opportunities Fund III, L.P.||Nov-2003||$1,400|
|OCM Principal Opportunities Fund IV, L.P.||Oct-2006||$3,328|
|Special Account C||Dec-2008||$505|
|Oaktree Capital Principal Fund V, L.P.||Feb-2009||$2,827|
|OCM Principal Opportunities Fund VI, L.P.||Nov-2015||$1,223|
|European Principal Investments|
|OCM European Principal Opportunities Fund, L.P.||Mar-2006||$495|
|OCM European Principal Opportunities Fund II, L.P.||Dec-2007||€1,759|
|Oaktree Capital European Principal Fund III, L.P.||Nov-2011||€3,164|
|Oaktree European Principal Fund IV.L.P||TBD||€936|
|European Private Debt|
|Special Account E||Oct 2013||€379|
|Oaktree European Dislocation Fund||Oct 2013||€294|
|Oaktree European Capital Solutions Fund||Dec 2015||€430|
|OCM/GFI Power Opportunities Fund, L.P.||Nov-1999||$449|
|OCM/GFI Power Opportunities Fund II, L.P.||Nov-2004||$1,021|
|Oaktree Capital Power Opportunities Fund III, L.P.||Apr-2010||$1,062|
|Oaktree Capital Power Opportunities Fund IV, L.P.||Nov-2015||$1,106|
|Real Estate Opportunities|
|TCW Special Credits Fund VI, L.P.||Aug-1994||$506|
|OCM Real Estate Opportunities Fund A, L.P.||Feb-1996||$379|
|OCM Real Estate Opportunities Fund B, L.P.||Mar-1997||$285|
|OCM Real Estate Opportunities Fund II, L.P.||Dec-1998||$464|
|OCM Real Estate Opportunities Fund III, L.P.||Sep-2002||$707|
|OCM Real Estate Opportunities Fund IV, L.P.||Dec-2007||$450|
|Special Account D||Nov-2009||$256|
|Oaktree Capital Real Estate Opportunities Fund V, L.P.||Mar-2011||$1,283|
|Oaktree Real Estate Opportunities Fund VI||Aug 2012||$2,677|
|Oaktree Real Estate Opportunities Fund VII||Jan-2016||$2,920|
|Real Estate Debt|
|Oaktree Capital PPIP Fund, L.P.||Dec-2009||$2,322|
|Oaktree Real Estate Debt Fund||Sep 2013||$1,112|
|Oaktree Real Estate Debt Fund II||TBD||$505|
|Real Estate Value-Add|
|Special Account G||Oct-2016||$615|
|OCM Mezzanine Fund I, L.P.||Oct-2001||$808|
|OCM Mezzanine Fund II, L.P.||Jun-2005||$1,251|
|Oaktree Capital Mezzanine Fund III, L.P.||Dec-2009||$1,592|
|Oaktree Mezzanine Fund IV||Oct 2014||$852|
|Highstar Capital IV||Nov 2010||$2,000|
|Oaktree Infrastructure Fund||TBD||$409|
|Emerging Markets Opportunities|
|Oaktree Emerging Market Opportunities Fund||Sept 2013||$384|
|Special Account||Jan 2014||$253|
|Fund||Inception Date||AUM ($m)|
|Open End Fund|
|U.S. High Yield Bonds||1986||$17,289|
|High Income Convertibles||1989||$863|
|European High Yield Bonds||1999||$1,316|
|U.S. Senior Loans||2008||$1,572|
|European Senior Loans||2009||$1,422|
|Global High Yield Bonds||2010||$4,425|
|Emerging Markets Equities||2011||$3,060|
|Fund||Inception Date||AUM ($m)|
|Emerging Markets Absolute Return||1997||$131|
|Emerging Markets Debt Total Return||2015||$441|
|Corporate and Corporate Pensions||24||23,749|
|Sovereign Wealth Funds||8||8,351|
|Endowments and Foundations||6||5,716|
|Private - HNW/Family Office||5||5,041|
|Sub-Advisory - Mutual Funds||8||8,685|
|Fund of Funds||3||3,028|
|Oaktree and Affiliates||4||4,179|
- General Maritime - Oil tanker line utilizing foreign vessels and crews headquartered in New York
- Sky Holding — jet airplane ownership
- Fitness First - World's largest health club chain. Taken over in partnership with Marathon Capital Management in 2014. Sold to Quadrant Private Equity in 2016
- Verreries de l’Orne à Ecouché (Orne) — glass etching firm — 1 April 2010
- Campofrío Food Group — (24%) European food industry
- Conbipel — (100%) Italian fashion industry
- Quiksilver — American retail sporting company
- AdvancePierre Foods (a merger completed September 30, 2010, from Pierre Foods, Advance Foods, and Advance Brands) - a food manufacturing company with facilities in Iowa, Oklahoma, Ohio, North Carolina, Maine, & South Carolina.
- STORE Capital
- Billabong International Ltd. - Australia's largest surfwear company.
- Aleris International — acquired 1 May 2010
- Almatis Group — acquired 2010
- Triton Media Group — media group managed by Oaktree Capital
- Townsquare Media — broadcast station and local media company owned by Oaktree Capital — acquired 1 April 2010
- Cumulus Media — An October 20, 2011, SEC filing by Oaktree Capital shows that it has purchased 3,985,983 shares of Cumulus Media stock, giving Oaktree Capital a position currently valued at $11,320,192 in the radio operator.
- Tribune Company — acquired jointly with JPMorgan Chase and Angelo, Gordon & Co.; acquisition completed July 2012.
- Nine Entertainment Co. — taken over (alongside Apollo Global Management and Goldman Sachs) from CVC Asia Pacific in a refinancing deal in Oct 2012.
- MediaWorks New Zealand — acquired a controlling 77.8% share in the business, after recently purchasing shares from RBS and Westpac; acquisition completed April 29, 2015.
- AdvancePierre Foods (a merger completed September 30, 2010, from Pierre Foods, Advance Foods, and Advance Brands) — a food manufacturing company with facilities in Iowa, Oklahoma, Ohio, North Carolina, Maine, & South Carolina.
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- Capitalcapital.com/about/investment-philosophy.aspx "Oaktree Capital's investment philosophy" Check
|url=value (help). Los Angeles: Oaktree Capital Management. Retrieved 2010-05-12.
- Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". Business Day: DealBook.
- "Oaktree Capital Management Group, LLC; Oaktree Capital Appoints Marna Whittington to Board of Directors". Investment Weekly News. July 21, 2012.
- Vincent, Roger (November 14, 2014) "Oaktree Capital agrees to expand offices in downtown Los Angeles" Los Angeles Times
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- Thomas, Brad (June 4, 2012). "Why I Don't Currently Own Shares In REITs". Seeking Alpha. Retrieved 2012-07-12.
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- Wee, Gillian (June 26, 2011). "Marks puts Oaktree Capital Management on path to IPO". The Washington Post. Retrieved 2012-07-12.
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- Rundle, Rhona (March 16, 1995). "TCW's Junk-Bond Chief, Marks, Others, to Start Their Own Firm -- Departures Are Major Blow and Could be Followed by Client Defections". Wall Street Journal.
- Capitalcapital.com/about/Oaktree Capital-story.aspx "The Oaktree Capital Story" Check
|url=value (help). Oaktree Capital. 2009. Retrieved 2012-01-12.
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- "Oaktree Capital Management Company, Exchange Act Release No. 51709 (May 19, 2005)." (PDF). May 19, 2005. Securities and Exchange Commission. Retrieved 10 August 2011.
- Sakoui, Anousha (October 28, 2008). "Distressed debt funds maintain tight secrecy as offereings abound". Financial Times.
- Shieber, Jonathan (November 2011). "PPIP Brings Investors Narrow Opportunities, Nice Returns". The Private Equity Analyst.
- Protess, Ben (January 24, 2011). "Bad Asset Purchase Program Turning a Profit; DealBook". New York Times.
- Kouwe, Zachery (February 10, 2009). "Washington Hopes 'Vulture' Investors Will Buy Bad Assets". New York Times. Retrieved 2012-07-12.
- Paletta, Damian (July 9, 2009). "Treasury unveils a trimmed down PPIP - Nine fund managers picked for $30 billion program to buy toxic securities; Pimco backs out". Wall Street Journal.
- "Sabal Financial Group, L.P. Milestone Asset Resolution Company Expands with Investment from an Affiliate of Oaktree Capital Management, L.P". Real Estate Weekly. July 8, 2011.
- Casacchia, Chris (July 4, 2011). "Newport Firm in Deal with Oaktree Capital". Orange County Business Journal.
- Deng, Chao. "Oaktree Capital's Marks Says Investors Should Insist on 'Low Prices' in Europe". LBO Wire. July 3, 2012.
- Kreutzer, Laura (February 9, 2012). "Washington to Recommend $1B in Private Equity Commitments". LBO Wire.
- Kuo, Patricia (March 6, 2012). Capital-is-said-to-raise-4-billion-fund-to-buy-distressed-european-assets.html "Oaktree Is Said to Raise $4 Billion Fund to Buy Distressed European Assets" Check
|url=value (help). Bloomberg. Retrieved 2012-07-12.
- Davis, Levi (March 30, 2012). "SF Employees Considering Distressed Debt". Money Management Letter.
- Sender, Henry (May 10, 2007). "Oaktree Capital to try a new twist for share sale; use of Goldman market avoids regulations, doesn't cede control". Wall Street Journal.
- Sender, Henry (June 18, 2011). "Oaktree Capital Management files for $8bn NYSE listing". Financial Times.
- Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". The New York Times. Retrieved 2012-01-12.
- Sender, Henry (May 17, 2011). "Oaktree Capital Management sows seeds for listing on NYSE". Financial Times.
- Hausmann, Daniel (2010-04-23). "Carlyle’s Flightplan: Betting On An Aviation Recovery". Private Equity Beat. Dow Jones. Retrieved 2010-05-14.
- "Investissement, mais coupe claire aux Verreries de l’Orne". L'Usine Nouvelle (in French). Antony, Hauts-de-Seine, France. 2010-04-22. Retrieved 2010-05-14.
- Campofrío Food Group[better source needed]
- CONNELLY, LAYLAN. "Quiksilver, free from bankruptcy, talks booze and boardshorts". Retrieved 2016-06-27.
- Fickling, David and Angus Whitley. "Billabong Sees Revival with Oaktree-Centerbridge Debt Plan." Bloomberg
- Nadgir, Santosh (2010-05-13). "Aleris reorganization plan confirmed by court (UPDATE 1)". Bangalore. Reuters. Retrieved 2010-05-14.
- "Almatis Group Files Pre-packaged Chapter 11 Cases to Implement Agreed Financial Restructuring" (Press release). Frankfurt: Almatis Group. 2010-04-30. Retrieved 2010-05-14.
- Marek, Lynne (23 July 2012). "Tribune's bankruptcy exit could mean company breakup". Crain's Chicago Business. Retrieved 1 November 2012.
- "MediaWorks Ownership Update". MediaWorks. 29 April 2015. Retrieved 22 May 2015.
- 2011: The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks (Columbia University Press, ISBN 978-0231153683)