Howard Marks. The name resonates with value investors and knowledge about distressed debt. He is someone who appreciates a clear, level-headed perspective in the often-turbulent world of finance. He is a co-founder and co-chairman of Oaktree Capital Management. It is a firm renowned for its expertise in navigating troubled waters. Similarly, Marks has built a reputation for identifying opportunities where others see only risk. So, what exactly is he betting on these days?
Let’s pull back the curtain and take a closer look at the portfolio Howard Marks steering at Oaktree.
Forget chasing the latest tech fad or meme stock frenzy. Marks’ approach is fundamentally about unearthing value, managing risk, and understanding the cyclical nature of markets. He’s not afraid to wade into less glamorous sectors. He can sniff opportunities where irrational fear or market inefficiencies have created mispriced assets.
Now, you won’t get a complete, real-time picture of everything Oaktree holds. But SEC 13F filings, which are our primary source of publicly available data, only offer a snapshot of certain equity holdings.
Think of it as a glimpse through a keyhole, rather than a full panoramic view. However, even this partial view provides valuable insights into Howard Marks’ thinking. Here is a brief glimps into his stock portfolio.
Howard Marks Stock Portfolio
| Stock Name | Ticker | Shares Held | Portfolio Weight (%) | Value (USD) | Notes |
|---|---|---|---|---|---|
| TORM PLC | TRMD | 40,581,120 | 25.97% | $1,443,063,000 | Reduced by 8% (-3.53M shares) |
| Expand Energy Corp (formerly Chesapeake Energy) | EXE (CHK) | 6,900,000 | 10.61% | $566,000,000 | Steady holding, no recent buy |
| Garrett Motion Inc | GTX | 35,881,000 | 6.77% | $361,000,000 | No significant change |
| Sitio Royalties Corp | STR | 12,000,000 | 5.06% | $270,000,000 | Steady holding |
| Infinera Corp | INFN | 25,000,000 | 3.19% | $170,000,000 | No significant change |
| Star Bulk Carriers Corp | SBLK | 6,500,000 | 2.53% | $135,000,000 | No significant change |
| Talen Energy Corp | TLN | 699,000 | 2.37% | $125,000,000 | New buy in Q3 2024 |
| Runway Growth Finance Corp | RWAY | 10,800,000 | 2.36% | $125,000,000 | Reduced by 30% (-4.7M shares) |
| Vistra Corp | VST | 1,000,000 | 2.03% | $112,000,000 | Steady holding |
| Ally Financial Inc | ALLY | 3,000,000 | 1.93% | $107,000,000 | No significant change |
| California Resources Corp | CRC | 2,050,000 | 1.92% | $106,000,000 | New buy in Q3 2024 |
| EnLink Midstream LLC | ENLC | 2,530,000 | 0.61% | $33,800,000 | New buy in Q3 2024 |
| Indivior PLC | INDV | 1,800,000 | 0.50% | $27,500,000 | Increased by 111.92% (+950K shares) |
| Liberty Global Ltd-A | LBTYA | 3,801,637 | 1.15% | $66,260,000 | Increased by 57.12% (+1.38M shares) |
| Yum China Holdings Inc | YUMC | 500,000 | 0.32% | $17,500,000 | New buy in Q3 2024 |
As of the most recent filings (Q3 2024), Oaktree’s portfolio, managed under Marks’ watchful eye, reveals a strategic blend of sectors. It shows a definite lean towards industries that generate consistent cash flows or present undervalued prospects.
The firm manages a substantial portfolio worth around $5.55 billion, while total assets under management exceed $180 billion.
Top Holdings
Let’s zoom in on the top positions. Right off the bat, TORM PLC, a shipping company specializing in refined oil products, jumps out. With over 25% of the portfolio allocated to this single company, it’s clear Marks sees compelling value in the shipping sector. Perhaps he believes in the resilience of global energy demand, the ongoing need for refined product transportation, or a combination of both.
Next up, we have Expand Energy Corp, formerly known as Chesapeake Energy, clocking in at around 10.6% of the portfolio. This suggests a continued bullishness on the energy sector, especially companies that have undergone restructuring and emerged with stronger fundamentals. Marks isn’t necessarily chasing the latest renewable energy hype. He’s betting on the enduring importance of energy production, particularly from companies that have weathered past storms.
Then there’s Garrett Motion Inc., an automotive technology firm focusing on turbochargers, which occupies about 6.8% of the portfolio. This is a fascinating play on innovation within the automotive industry. Even as the world shifts towards electric vehicles, improving the efficiency of traditional combustion engines remains crucial, particularly for hybrid models and for markets where EV adoption is slower.
Rounding out the top five, we find Sitio Royalties Corp (5%) and Infinera Corp (smaller stake). Sitio Royalties offers exposure to oil and gas royalties, providing a stream of income tied to commodity prices without the operational complexities of actually drilling for oil. Infinera, a telecommunications equipment company, suggests a strategic bet on the ongoing expansion of digital infrastructure.
Fresh Bets
What’s new in Q3 2024?
The beauty of analyzing these filings isn’t just in the static snapshot; it’s in tracking the changes over time.
In Q3 2024, Oaktree was actively adjusting its positions. While reducing its TORM stake by about 8%, possibly to lock in gains or rebalance the portfolio, the firm was also adding some intriguing new names.
- One significant addition was Talen Energy Corp. Oaktree scooped up nearly 700,000 shares, making it a sizable holding. Talen, with its nuclear assets, aligns with Marks’ interest in the energy sector.
- Other new energy plays include California Resources Corp and EnLink Midstream.
- Oaktree also increased its stakes in Indivior PLC and Liberty Global Ltd-A.
- And also took a position in Yum China Holdings Inc.
Beyond Equities
It’s crucial to remember that 13F filings only paint a partial picture.
Oaktree’s roots lie in distressed investing, and the firm maintains a significant presence in the following asset classes as well:
- Debt instruments,
- Preferred stocks, and
- Convertible bonds.
Marks has also recently hinted at opportunities in private equity and real estate, particularly in areas where high interest rates are putting pressure on leveraged assets. These areas are not transparently reported.
The Marks Mindset
Ultimately, Howard Marks’ portfolio at Oaktree reflects a disciplined, value-driven strategy. It’s about finding opportunities in cyclical or out-of-favor industries, often where others see only risk.
The portfolio isn’t static; it’s constantly being re-evaluated and adjusted based on market conditions. With a turnover rate around 11%, Oaktree balances conviction with flexibility.
In a world often driven by hype and short-term speculation, Howard Marks offers a refreshing dose of long-term thinking and disciplined value investing.
By carefully studying his portfolio, we can gain valuable insights into his approach and potentially identify opportunities that others might be overlooking.
It’s not about blindly copying his moves, but about learning from his methodology and applying it to our own investment decisions. After all, as Marks himself often says, “Investing is a thinking man’s game.”
Have a happy investing.
