Howard Marks Latest Memo on Markets & Tax Cuts

Oaktree Capital's Chairman Howard Marks is out with his latest memo entitled "Latest Thinking."  In it, he details his take on the markets and tax cuts.

He begins by highlighting the positives: fundamentals are solid, worldwide growth is in full effect, deregulation and pro-business policies are in place, etc. 

He then turns to the negatives, writing.

"Most valuation parameters are either the richest ever (Buffett ratio of stock market capitalization to GDP, price-to-sales ratio, the VIX, bond yields, private equity transaction multiples, real estate capitalization ratios) or among the highest in history (p/e ratios, Shiller cycle-adusted p/e ratio).  In the past, levels like these were followed by downturns.  Thus a decision to invest today has to rely on the belief that 'it's different this time.' Prospective returns in the vast majority of asset classes are some of the lowest in history."

Marks says that he would be on the "defensive or cautious part of the spectrum" in regards to portfolio construction at the moment.   You can read his full thoughts:

Embedded below is Howard Marks' new memo, "Latest Thinking":



You can download a .pdf copy here.

For more from this investor, be sure to also read his well-known book, The Most Important Thing.

1-Week Free Trial to Scuttleblurb: Investment Analysis and Commentary

Scuttleblurb.com is giving our readers a free 1-week trial.  With earnings season in full swing, it's the ideal time to check it out.

Scuttleblurb provides subscribers with balanced and insightful fundamental equity analysis and commentary on companies across a variety of industries, as well as time-saving summaries of earnings calls and sell-side conferences ("Quick Blurbs").  Sample blurbs are available on the site. 

As a subscriber, you'll get access to their growing library of content and weekly email updates on 100+ blurbs per year (several hundred pages of analysis and summaries).
  

Click here to take advantage of the free 1-week trial for Market Folly readers. 


Recent posts include:

[OAK] Valuation Attractive on Normalized Fee-Related Earnings

[DLTR, DG] Dollar Store Deep Dive

[CHUBA/K] A Skeptical Take

Quick Blurbs [WETF, ALLY, HBI, ANTM, AMZN, LUV, URI, WNC]

Howard Marks' Presentation at London Value Conference on the Sweet Spot in Corporate Bonds

Continuing our notes from the London Value Investor Conference 2013, the next speaker is distressed investor Howard Marks of Oaktree Capital.  He shared an outlook similar to what he's been writing.  However, he did highlight where a lot of his portfolio has been allocated.

Marks is the author of one of the best  investment books ever written, “The Most Important Thing". The book has recently been reissued  as “The Most Important Thing Illuminated” with commentary by Seth Klarman, Joel Greenblatt, Christopher Davis and Paul Johnson, making the already outstanding volume even better.

Marks has  done a lot of interviews and presentations recently. For those who have seen these and avidly read  his regular memos there honestly was not a lot new in the London presentation.  If you missed those, one of his last memos touched on how he thought equities were in stage 2 of a bull market.

One fascinating thing Marks alluded to in the Q&A, though, was that he views single b as the sweet  spot in corporate bonds. He said “most bonds in my portfolio have been single b for years.”

We've also highlighted some of Oaktree's recent equity portfolio moves here.


Be sure to check out other investor presentations: notes from the 2013 London Value Investor Conference.

Broyhill's Presentation on Oaktree Capital Group: Solid as an OAK

Broyhill Asset Management recently released a slideshow presentation with their pitch on Oaktree Capital (OAK).  Entitled "Solid as an OAK," they believe it's an exceptional company trading at a significant discount to intrinsic value.

Oaktree is one of the most widely recognized credit managers in the industry and shares of the company went public earlier this year.  We've covered commentary from their Chairman Howard Marks numerous times as it's one of Warren Buffett's favorite reads.


Broyhill's Thesis on OAK

They feel OAK is:

- Run by superior management with high ownership interest
- Has favorable industry tailwinds
- Has a catalyst for realizing value

They see accelerating cash distributions in 2013 and 2014 as a catalyst for investors.

Other notable institutional owners of OAK shares as of the end of Q3 include David Einhorn's Greenlight Capital, Kingdon Capital, as well as Farallon Capital.


Embedded below is Broyhill's full presentation: Solid as an OAK:





For more on this stock, Brooklyn Investor has also published a series of research on it, highlighting OAK's stake in DoubleLine Capital.

Howard Marks on Oaktree's IPO

Oaktree Capital's Chairman and founder Howard Marks was recently on Bloomberg TV talking about his company's recent initial public offering (IPO).


On pricing an IPO and investing in general: "You can't ignore your environment when you take investment action." He mentions this because he had to reduce Oaktree's offering and it priced at the lower-end due to the rough market as of late.

His thoughts on the environment: "We're not at the bottom.  I don't think we're at the top. I don't detect frothy psychology.  I don't see peak valuations, if you look at things like P/E ratios on stocks or yield spreads on riskier bonds. I think we're on some middle ground."

On how he's approaching things now: "Our mantra is move forward... but with caution.  We do have a good level of caution, primarily because of the macro concerns."

We also highlighted how David Einhorn's Greenlight Capital disclosed a stake in Oaktree after it went public.

Embedded below is Marks' interview with Bloomberg TV:



Be sure to also check out an excerpt from his book we've posted up: Marks on contrarianism.

David Einhorn's Greenlight Capital Reveals Stake in Oaktree Capital (OAK)

David Einhorn's hedge fund Greenlight Capital recently filed a 13G with the SEC regarding a brand new position in Oaktree Capital (OAK).  Per the filing, they now own 5.5% of the company with 1,679,750 shares.

Oaktree recently completed its initial public offering (IPO) on April 13th.  Readers will be very familiar with this company as we often post up letters from its Chairman, Howard Marks.  We've also posted up an excerpt from Marks' book on investing.

It's hard to say whether or not Greenlight participated in the IPO, but the regulatory threshold was crossed due to trading activity on April 20th which required them to file with the SEC.


Per Google Finance, Oaktree Capital is "a global investment management firm focused on alternative markets. Oaktree manages funds in investment strategies that fall into the six asset classes, which include distressed debt, corporate debt, control investing, convertible securities, real estate and listed equities."

If you missed it, we've also posted up a transcript of Einhorn's questions on the Herbalife call that caused the stock to drop almost 20%.