Quote · My First Million
Howard Marks: how I make money while you worry about a market crash
Where this was said
Raising $11B at a Time of Crisis
At 17:31 · chapter starts 14:51
Sam Parr stops Marks to dig into the mechanics of a feat most investors will never accomplish: raising $11 billion from institutional investors at a moment of great uncertainty. Marks breaks it into components. First, prior experience: Oaktree was founded in 1988, giving them two decades of strong results and deep relationships to draw upon. Second, strategic positioning: distressed debt is uniquely suited to crisis, and Oaktree had performed exceptionally in the crises of 1991 and 2001–2002. Third, and most importantly, Oaktree had credibility because they consistently shrank their subsequent fund after a great-performing one — the opposite of every other manager — signaling that they were driven by opportunity, not fee maximization. Marks quotes the movie Spy Game: 'When did Noah build the ark? Before the flood.' You cannot raise money during the crisis because the news is too terrible. You have to have the fund ready to deploy before people know they need it. [1] — Howard Marks "You can't raise money during a crisis because the news is too terrible. Oaktree raised $11B before the 2008 crash by pointing to real flaws…" 25:00
When Lehman collapsed, there was no data, no historical analogy — only supposition. Oaktree's logic was simple: if the financial world ends, nothing matters. If it doesn't, and you don't invest, you failed your mandate. Bruce Karsh deployed $450M a week for 15 weeks.
Before the 2008 crisis, the largest distressed debt fund in history was Oaktree's 2002 fund at $2.5 billion.
Oaktree raised an $11 billion distressed debt fund in 2007–2008 before the crisis hit, the largest of its kind at the time.
