Howard Marks (investor)

Howard Stanley Marks (born April 23, 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 2020, with a net worth of $2.1 billion, Marks was ranked No. 391 on the Forbes 400 rankings of the wealthiest Americans.[2]

For the Welsh drug smuggler, see Howard Marks.
Howard Marks
Born (1946-04-23) April 23, 1946
New York City, U.S.
Alma materWharton School of the University of Pennsylvania (BS)
University of Chicago (MBA)
OccupationCo-founder and co-chairman of Oaktree Capital Management
Net worth$2.1 billion (August 2020)[1]
Spouse(s)Nancy Freeman Marks
ChildrenAndrew Marks (with Nancy)
Jane Hait (step-child)
Websitewww.oaktreecapital.com

Marks is admired in the investment community for his "memos", which 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.[3][4] 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."[5]

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.[5] 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. Marks does favor using market timing strategies to have cash available to be invested during a downturn.[6] 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".[7]

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

Howard Marks was born in 1946 and raised in Queens, New York.[8] Although his family was ethnically Jewish, he was raised as a Christian Scientist.[9] He attended the Wharton School of the University of Pennsylvania for undergraduate studies, where he graduated cum laude in 1967 with a major in finance and a minor in Japanese Studies.[8] 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] He is a CFA® charterholder since 1975.[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.

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;[13] when TCW refused, the 5 partners left the company and founded Oaktree Capital Management in Los Angeles.[14][15][4][1]

Oaktree

After being founded in 1995, Oaktree grew rapidly, focusing on high-yield debt, distressed debt, and private equity.[4]

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".[4]

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.[15]

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.[16]

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 child with his second wife Nancy (née Freeman): Andrew Marks, who runs Freemark Partners, the investment firm for the Marks family, and one step-child: Jane Hait, 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.

Residences

In 2010, Marks bought an oceanfront property in East Hampton for $30 million.[17] In May 2012, he and his wife purchased a duplex unit at 740 Park Avenue for $52.5 million.[18] In 2013, Marks sold his mansion in Malibu, California for $75 million.[19] In 2015, he purchased a house in Beverly Hills for $23.7 million.[20] In 2017, he purchased the house next door to his house in Beverly Hills for $9.7 million.[21] In 2019, he purchased parcels in Amagansett, New York, near his East Hampton property, for $35 million.[22]

Political affiliation

Marks is a member of the Democratic Party and has been critical of the economic policy of Donald Trump.[23] In 2016, he contributed over $200,000 to the Hillary Victory Fund and similar organizations.[24] However, he has criticised the tax plan proposed by Alexandria Ocasio-Cortez, saying "a great deal of America’s economic progress has resulted from people’s aspiration to make more and live better".[25]

Books
  • 2011: The Most Important Thing: Uncommon Sense for the Thoughtful Investor[26]
  • 2012: The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor[27]
  • 2018: Mastering the Market Cycle: Getting the Odds on Your Side[28]

References
  1. "Forbes: the World's Billionaires - Howard Marks". Forbes. Archived from the original on 2018-12-25. Retrieved 2017-08-31.
  2. "The Forbes 400 2020: The Richest People in America". Forbes. Archived from the original on 2019-10-07. Retrieved 2020-09-10.
  3. Walsh, Ben (December 21, 2011). "The Best Of Howard Marks: Advice From A Legendary Investor". Business Insider. Archived from the original on April 9, 2017. Retrieved March 4, 2020.
  4. Kimes, Mina (March 31, 2011). "Howard Marks: bonds are back in fashion". CNN. Archived from the original on March 17, 2016. Retrieved March 4, 2020.
  5. Zhen, Ye (November 14, 2013). "Investing: 'not a game, not a hobby'". Shanghai Daily. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  6. Kobayashi-Solomon, Erik (September 14, 2018). "Howard Marks On Business Cycles And The Option Value Of Cash". Forbes. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  7. "Howard Marks established Oaktree as a leader in distressed debt". Crain Communications. October 29, 2012. Archived from the original on January 24, 2015. Retrieved March 5, 2020.
  8. Wee, Gillian (June 17, 2011). "Biggest Distressed Debt Investor Marks Europe With 19% Returns". Bloomberg News. Archived from the original on 2020-04-09. Retrieved 2020-03-04.
  9. Marks, Howard (December 26, 2004). "Saving the mother tongue from a dusty silence". Los Angeles Times. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  10. "Biography: Howard Marks". Oaktree Capital Management. Archived from the original on 2016-11-29. Retrieved 2016-09-20.
  11. https://www.cfainstitute.org/community/membership/directory/pages/results.aspx?uid=23999
  12. "Mastering the Market Cycle: Getting the Odds on Your Side—A Conversation between Howard Marks, CFA, and CFA Society Portland". 10 January 2019. Archived from the original on 4 March 2020. Retrieved 4 March 2020.
  13. Petruno, Tom (March 16, 1995). "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". Los Angeles Times. Retrieved 1 May 2020.
  14. Petruno, Tom. "5 Key Officers to Leave TCW, Form New Firm". Los Angeles Times.
  15. Banerjee, Devin; Dharmarajan, Sheila (May 7, 2012). "Oaktree's Marks Says Share Sale Was Humbling Experience". Bloomberg News. Archived from the original on 2020-03-04. Retrieved 2020-03-04.
  16. "Brookfield to Acquire 62% of Oaktree Capital Management" (Press release). Globe Newswire. March 13, 2019. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  17. "Deutsch sells Hamptons property for $30M". The Real Deal. October 12, 2010. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  18. David, Mark (May 15, 2012). "Howard Marks Spends Big at 740 Park Avenue". Variety. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  19. Brennan, Morgan (January 7, 2013). "Billionaire Howard Marks Sells $75 Million Malibu Mansion In Record-Breaking Deal". Forbes. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  20. David, Mark (June 16, 2015). "Nick Vanoff Estate Sells to Billionaire Financier". Variety. Archived from the original on May 25, 2018. Retrieved March 5, 2020.
  21. McClain, James (October 21, 2017). "Billionaire Howard Marks spends nearly $10 million on the little house next door". Dirt. Archived from the original on October 27, 2020. Retrieved March 5, 2020.
  22. "Oaktree Capital's Howard Marks buys 4 Amagansett parcels for $35M". The Real Deal. May 23, 2019. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  23. Xiao, Derek (August 18, 2016). "Billionaire Investor Howard Marks Slams Trump's Economic Policies for 'Ignoring Economic Reality'". Forbes. Archived from the original on March 4, 2020. Retrieved March 4, 2020.
  24. "Howard Marks Political Campaign Contributions 2016 Election Cycle". Archived from the original on 2019-04-18. Retrieved 2020-03-04.
  25. Langlois, Shawn (January 31, 2019). "Billionaire Howard Marks on Ocasio-Cortez's tax plan: 'People at the bottom won't have as many at the top to resent'". MarketWatch. Archived from the original on 2019-02-23. Retrieved 2020-03-05.
  26. Marks, Howard (2011). The Most Important Thing: Uncommon Sense for the Thoughtful Investor. Columbia University Press. ISBN 978-0231153683.
  27. Marks, Howard (January 15, 2013). The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor. Columbia Business School Publishing. ISBN 9780231162845.
  28. Marks, Howard (October 2, 2018). Mastering the Market Cycle: Getting the Odds on Your Side. Houghton Mifflin Harcourt. ISBN 9781328480569.
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