Howard Marks' Memos and Key Lessons

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode was filmed live at an event during a Brookfield Oaktree Wealth Solutions RIA Council meeting in New York.

Armen Panossian, the Co-CEO and Head of Performing Credit at Oaktree, and I sat down for a conversation in a Brookfield-owned building with a group of RIAs in the audience.

Armen, who joined Oaktree in 2007, has been an integral part of scaling Oaktree to over $209B in AUM. Oaktree, a storied firm, particularly in distressed credit, was recently fully acquired by Brookfield, the $1T AUM alternative asset manager.

Armen has a wealth of experience across different areas of credit. He is the Head of Performing Credit, where his responsibilities include oversight of the firm’s liquid and private credit strategies and as a portfolio manager within the Global Private Debt and Global Credit strategies. He also led the development of Oaktree’s CLO business.

Armen and I had a fascinating and thought-provoking conversation. We covered:

• The evolution of Oaktree’s business.
• How the acquisition by Brookfield has helped scale Oaktree’s business.
• Why private credit is more than direct lending.
• The nuances of asset-based finance.
• The current state of the credit markets.
• How Oaktree has approached distressed credit investing.
• What Armen’s memo would be if he were to write a memo like his colleague Howard Marks. 
• And, why his memo might be titled “this is not your grandma’s private credit” or “don’t reach for risk to deliver the right return.”

Thanks Armen and the Brookfield Oaktree Wealth Solutions team for a fantastic night and Armen for sharing your wisdom and expertise with us.

Show Notes
00:00 Message from Ultimus, our Sponsor

01:59 Welcome to the Alt Goes Mainstream Podcast

04:02 Armen Panossian’s Background

04:22 Early Career and Education

05:42 Transition to Finance

08:04 Joining Oaktree

08:25 Oaktree's Early Days

09:25 Investment Philosophy and Growth

12:05 Balancing Pessimism and Business Building

14:49 Private Credit Market Overview

15:45 Core vs. Alpha in Private Credit

20:06 Public vs. Private Credit

21:39 Technicals and Fundamentals in Credit Markets

24:17 Valuation and Risk Management

25:22 Consumer Impact on Private Credit

25:46 Public Markets as Indicators

26:38 Oaktree's Historical Success

26:48 Howard Marks' Investment Philosophy

26:58 Market Dynamics and Investment Strategies

27:18 Opportunities in Life Sciences

27:58 Public vs. Private Market Solutions

28:27 Understanding Private Credit Risks

29:05 Credit Market Technicals

29:41 Fraud Vigilance in Credit Markets

30:07 Oaktree's Opportunistic Credit Approach

31:56 Rescue Lending and Sector-Specific Opportunities

32:37 Asset-Backed Finance Explained

34:52 Impact of Banking Regulations

35:24 Current Trends in Asset-Backed Finance

39:47 Navigating the Private Credit Ecosystem

40:50 Brookfield and Oaktree Partnership

42:09 Wealth Channel Investment Strategies

43:40 Brookfield and Oaktree: A Unique Partnership

45:45 Concerns in Private Credit

48:03 Advisors' Guide to Private Credit

50:47 Howard's Memos and Investment Philosophy

52:44 Evolving Private Credit Landscape

53:48 Conclusion and Final Thoughts

Editing and post-production work for this episode was provided by The Podcast Consultant.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.