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$99.9 billion (as of 31 March 2015[update])|
Oaktree Capital Management is a global asset management firm specializing in alternative investment strategies. 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, convertible securities, real estate and listed equities. As of March 31, 2015, the company managed $99.9 billion, primarily on behalf of pension funds, foundations, endowments, and sovereign wealth funds. On April 12, 2012, Oaktree Capital Group LLC became listed on the NYSE: OAK.
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. As of 2012 it has over 700 employees and offices in Los Angeles, where it is headquartered, London, New York, Hong Kong, Stamford (Connecticut), Tokyo, Luxembourg, Paris, Frankfurt, Singapore, Seoul, Beijing and Amsterdam.
With headquarters in Los Angeles, the firm has over 700 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.
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.
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 and principal investments. Within three months of its founding in 1995, “more than 30 TCW clients transferred $1.5 billion in assets to Oaktree.” Adding to the original asset classes, Oaktree’s investment activities currently include other complementary strategies. What it refers to as its “synergistic” investment strategies include specializations in power infrastructure, mezzanine debt, and senior loans. As of March 31, 2012, its assets under management were $77.9 billion.
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 1998 and 1999, Oaktree created 3 new strategies: Emerging Markets Absolute Return in 1998, European High Yield Bonds in 1999, 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 Opportunities (2006), European Senior Loans (2006), U.S. Senior Loans and Value Opportunities (2007), and Emerging Markets Equities in 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 11bn 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, 2011, the Oaktree PPIP Fund, L.P. had a gross return of 17.8%.
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 quarter ended March 31, 2012, Oaktree held a first closing for Oaktree Opportunities Fund IX, LP with $1.2 billion. Like its other Opportunities funds, Fund IX 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.”
In 2014, Oaktree acquired the infrastructure private equity firm Highstar Capital.
In 2015, Oaktree acquired a portfolio of United Kingdom commercial assets that the Irish Government held after its rescue of Irish banks. The National Asset Management Agency sold £226 book value UK commercial properties to Oaktree for £115m.
- 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|
|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|
|Asia Principal Investments|
|OCM Asia Principal Opportunities Fund, L.P.||May-2006||$578|
|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||€3,168|
|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|
|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||$1,025|
|Asia Real Estate|
|Oaktree Capital Asia Special Situations Fund, L.P.||May-2008||$19|
|Oaktree Capital PPIP Fund, L.P.||Dec-2009||$2,322|
|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||$1,592|
|Fund||Inception Date||AUM ($m)|
|Open End Fund|
|U.S. High Yield Bonds||Jan-1986||$14,265|
|High Income Convertibles||Aug-1989||$978|
|European High Yield Bonds||May-1999||$1,670|
|U.S. Senior Loans||Sep-2008||$7,800|
|European Senior Loans||May-2009||$782|
|Fund||Inception Date||AUM ($m)|
|Emerging Markets Absolute Return||Apr-1997||$577|
Current as of December 31, 2012: (Capitalcapital.com/about/ source)
|Sovereign Wealth Funds||9||6,574|
|Endowments and Foundations||8||5,874|
|Private - HNW/Family Office||6||4,849|
|Sub-Advisory - Mutual Funds||4||2,835|
|Fund of Funds||3||2,453|
|Oaktree Capital and Other||3||2,293|
- 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.
- 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
- Aluminum manufacturing
- 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.
- "The Oaktree story". Los Angeles: Oaktree Capital Management. Retrieved 2010-05-12.
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- Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". Business Day: DealBook.
- Capitalcapital.com/about/investment-philosophy.aspx "Oaktree Capital's investment philosophy" Check
|url=value (help). Los Angeles: Oaktree Capital Management. Retrieved 2010-05-12.
- "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
- Sender, Henry (November 12, 2011). "MF Global Reminds us we have much to learn from crisis". Financial Times.
- Sender, Henry (November 12, 2011). "MF Global reminds us we have much to learn from the crisis". Financial Times.
- "Oaktree Capital Management Company". International Directory of Company Histories. Saint James Press. 2005.
- Thomas, Brad (June 4, 2012). "Why I Don't Currently Own Shares In REITs". Seeking Alpha. Retrieved 2012-07-12.
- Lattman, Peter (May 18, 2011). "Oaktree Capital, an Investment Firm, Is Said to Plan Stock Exchange Listing". New York Times.
- Atlas, Riva (2001). "Company in Trouble? They're Waiting". New York Times.
- "Finance and Economics: The vultures take wing; Investing in distress". The Economist. March 31, 2007.
- Arnold, Martin (May 17, 2008). "Oaktree Capital raises 11bn for distressed debt fund". Financial Times.
- Wee, Gillian (June 26, 2011). "Marks puts Oaktree Capital Management on path to IPO". The Washington Post. Retrieved 2012-07-12.
- 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". The Wall Street Journal. Retrieved 2012-01-12.
- Cox, Rob (May 19, 2011). "A Balancing Act at Oaktree Capital Management". New York Times.
- 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.
- "Oaktree Capital Management Company". International Directory of Company Histories . Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2012.
- Sender, Henry (June 18, 2011). "Oaktree Capital Management files for $8bn NYSE listing". Financial Times.
- Mackintosh, James (December 14, 2006). "Smarties and Debt Restructuring". Financial Times.
- "Oaktree Capital S1". United States Securities and Exchange Commission. June 17, 2011. Retrieved 2012-01-12.
- "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.
- Capital-Schedules-Quarter-2012-Earnings-Conference-Call "Oaktree Capital Management Group, LLC Announces First Quarter 2012 Financial Results" Check
|url=value (help). Business Wire. May 10, 2012. Retrieved 2012-01-12.
- Davis, Levi (March 30, 2012). "SF Employees Considering Distressed Debt". Money Management Letter.
- Banerjee, Devin. "Oaktree Buys Highstar for Infrastructure Investments". Bloomberg.com. Retrieved 2016-07-16.
- "Oaktree wins NAMA's multi-borrower Project Albion, paying around £115m". Retrieved 2016-08-26.
- 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.
- Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". The New York Times. Retrieved 2012-01-12.
- Marcin Goettig (10 June 2015). "Oaktree Capital and Pimco buy 41.6 percent stake in Poland's Echo Investment". Reuters. Retrieved 10 June 2015.
- 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.
- 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)