Summary: In today's podcast, we hear Howard Marks, chairman of Los Angeles-based distressed debt giant Oaktree Capital Management, discuss Oaktree's organic growth, where he sees attractive investment opportunities in distressed debt today, and how will the U.S. Federal Reserves' reduction of its quantitative easing programs impact Oaktree's businesses. Marks gave the following comments at the Goldman Sachs Financial Services Conference in New York. Read an excerpt below, but be sure to listen to the full interview in audio above. Don't forget to subscribe to the podcast in the iTunes store to automatically receive future podcasts. Q: How will the U.S Federal Reserves' reduction of the quantitative easing programs impact Oaktree's businesses? A: First, the question I get asked the most often nowadays is "when will the Fed taper?" (This question) is the most irrelevant. If it's going to rain tomorrow, you bring an umbrella. But you don't sit around and think: Is it going to rain at twelve or two (o'clock). I think tapering should and will happen. But I don't think it's going to mean that much because (interest) rates have already adjusted (to the expectation of tapering). In addition, I don't think that the businesses are so strong, the demand for capital are so strong and inflation is so high that the natural interest rates would be much higher than they are now. The impact on Oaktree will not be so great. Interest rates are not the main determinant of value in the things that we do. Impact on our bond holdings, mostly in high yield bonds, is limited. Q: How has Oaktree been growing and where is Oaktree headed? A: When we started in 1995, we had 7 strategies. Today, we have diversified to around 20. We have grown steadily and organically. If you look at our chart of our asset under management (AUM), it appears that it has been fluctuating. In 2001 and 2002, we raised $3.5 billion while historically our funds have been around $1 billion. We've made half a billion in carried interest on that. Then in 2007 and 2008, we raised $11 billion. So far, we've made $2 billion of carried interest. Aside from these two periods, we have had steady and gradual growth of around 10% to 11% (of AUM) on average. We are well on our way of making 2013 the seventh year in a row when we add $10 billion or more in new money. Q: Are you finding very few distressed debt opportunities in the market place today? A: There is absolutely a paucity of bargain price distressed opportunities. The opportunities are in a few packages: shipping, power, non-prime real estate and Europe. Even there, there are no forced sellers. .....
