Howard Marks doesn’t talk much about his early life, but we know he grew up in Queens, NY. His family was ethnically Jewish, but they did not practice the religion. Instead, they raised Howard as a Christian Scientist.
Marks’s academic aptitude and head for numbers earned him a spot at the Wharton School. As he learned more about financing and investing, he started formulating the strategies that made him a billionaire.
How Did Howard Marks Get His Start?
Howard Marks got started by studying finance at the Wharton School. After graduating at the top of his class, he attended the University of Chicago Booth School of Business. In addition to completing the MBA program with a focus on accounting and marketing, the school awarded him the George Haw Brown Prize.
Marks took his first professional job at Citicorp. He started as an equity research analyst but got promoted to Citicorp’s Director of Research within a decade. In 1978, he became the company’s Vice President. He also worked as a senior portfolio manager, a role that let him explore his interest in convertible and high-yield debt.
As a thought leader in convertible and high-yield debt strategies, many investment companies wanted Howard Marks to join their teams. Marks decided to take a job at TCW Group.
He had been serving as Citicorp’s Vice President remotely from the company’s New York headquarters. Now, he didn’t need to make that sacrifice.
While at TCW Group, Marks and Bruce Karsh became some of the first investors to purchase distressed debt from a financial institution. Their success encouraged them to form an independent company where they could take more bold actions. Originally, Marks wanted to keep managing funds for TCW Group. The company refused his offer, though, so he and four other partners left to form Oaktree Capital Management.
Today, Marks is best known for his work at Oaktree.
Who Does Howard Marks Work For?
Howard Marks has worked for Oaktree Capital Management since he co-founded the business in 1995.
He currently serves as Oaktree’s co-chairperson.
How Much Money Does Howard Marks Make?
As an investor, the amount of money Howard Marks makes annually varies according to his profile’s performance. His strategy for slow, steady growth, however, has turned him into a multibillionaire.
He also earns money for his roles at Oaktree and from the books he writes.
How Much of Oaktree Does Howard Marks Own?
Howard Marks reportedly owns a 7.5% stake in Oaktree.
Brookfield Asset Management has owned a controlling stake in Oaktree since 2019. Despite Brookfield’s 61% ownership, Oaktree operates independently.
This arrangement likely makes it possible for Marks and his colleagues to keep following their unique strategies while Brookfield collects some of the profits.
Howard Marks Investment Strategy?
Howard Marks has written three books about investing, so keen investors can learn his strategy. But you don’t have to pore through hundreds of pages to understand his investment strategy. Oaktree’s investment philosophy includes:
Risk Control Comes First
Howard Marks doesn’t believe that high returns during a market upswing say much about a portfolio manager’s ability. Of course, he prefers generating the highest possible returns, but he believes it takes much more skill to control losses during downturns.
Marks might have this perspective because he often focuses on distressed assets. Regardless of the reason, it has served him and his clients well.
As Oaktree’s website says, “If we avoid the losers, the winners will take care of themselves.” Knowing how to distinguish between losers and winners helps control risk and contribute to long-term success.
Consistency Matters
Marks prefers seeing consistent returns throughout the year and beyond. Some investors and investment managers don’t mind wild fluctuations as long as they generate an overall profit.
Marks seems to consider this a lazy, luck-driven approach. He would much rather see consistent returns than a mix of unbelievable successes and horrible failures.
Take Advantage of Inefficient Markets
Investors have access to a wealth of knowledge about company performances and potential stock fluctuations. Today, people can find all the information they need by reading online reports and paying attention to industry analysts.
Howard Marks appreciates the hard work that goes into gaining a “knowledge advantage” that leads to successful investments. However, he doesn’t pursue that strategy. He sees so many hard-working investors willing to put in hours of research that he doesn’t believe it’s an efficient approach to investing.
Instead, he prefers targeting less efficient markets that don’t get as much attention from investors. Focusing on those prospects lets him discover hidden gems that he can manage effectively for clients.
Benefit From Specialization
Oaktree finds that it gets the best results when each portfolio specializes in a specific investment. This approach helps ensure that portfolio managers understand every asset under their supervision.
Specialized portfolios don’t prevent clients from investing in multiple industries. They can always combine the portfolios that interest them to create a custom investment. These Oaktree clients still benefit from specialization, though, because they can trust each portfolio to perform as well as possible.
Don’t Make Macro-Forecasting Essential to Investing
Howard Marks doesn’t believe that macro-forecasting leads to helpful investment decisions. This approach includes trying to determine how economies will evolve over time. It requires a lot of research and analysis.
Despite the excessive amount of work, it rarely provides higher returns. No matter how much research someone does, macro-forecasting comes down to making educated guesses. Marks doesn’t like guessing.
Instead, Oaktree focuses on learning about the companies. Once the group understands every aspect of a business, it can evaluate practices and processes to determine future success.
This bottom-up approach might not lead to the highest ROIs, but it does protect investors from loss while earning a steady stream of money.
Don’t Try to Time Markets
Howard Marks takes advantage of market fluctuations. For instance, he will keep reserve cash to buy stock during downturns.
Oaktree doesn’t, however, believe in trying to time markets. It will update portfolios to reflect current market conditions, but it doesn’t play short-sell games.
In fact, Oaktree believes in holding assets even as they lose value. The short-term pain of losing money during a downturn pales in comparison to the returns achieved when a well-managed company’s stock recovers.
What Stocks Does Howard Marks Own?
Howard Marks almost certainly has private investments that he doesn’t have to share with the public. However, we can look at Oaktree’s investment portfolio to gain some insight into the stocks Marks likely owns.
The most prominent stocks in Oaktree’s portfolio include:
- Chesapeake Energy Corp
- Garrett Motion Inc, an engineering firm that designs and manufacturers turbochargers for vehicles, including trains and delivery vans
- Sitio Royalties Corp, a company that invests in U.S. mineral and royalty interests
- Star Bulk Carriers Corp, a global shipping company based in Greece
How Did Howard Marks Make His Money?
Howard Marks made his money by investing in distressed assets. Marks just had to choose assets carefully and work to rehabilitate them. As their values grew, so did Marks’s wealth.
Marks didn’t become a billionaire, though, until he co-founded Oaktree and applied a no-nonsense approach to managing niche investment portfolios. He doesn’t chase deals that will earn huge amounts of money. Those opportunities almost always come with extremely high risk.
Instead, he researches companies to decide which ones are positioned for long-term success. He prefers lower, consistent returns to high, inconsistent returns. This approach has made him – and his clients at Oaktree – billions of dollars.
Is Howard Marks a Billionaire?
Howard Marks has likely been a billionaire for more than a decade. Forbes estimates his current net worth at $2.2 billion.
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