Billionaire Howard Marks (pictured) said the stock market turmoil thrown up by the coronavirus allows investors to get on the front foot.
“Given these new conditions, I no longer feel defense should be favored,” said the co-founder investment firm Oaktree Capital, in the latest of his memos to shareholders that are widely read on Wall Street.
Stalling economic activity around the world has caused stock markets to fall presenting investment opportunities to pick up company shares cheaply. Marks points out that potential returns are rising, specifically citing the typical yield for high-yield bonds rising from 3.5% to about 9%. He adds that prices for riskier assets have dropped as most investors avoid these stock, presenting an opportunity.
Marks said: “I feel it’s a time when previously cautious investors can reduce their overemphasis on defense and being to move toward a more neutral position or even toward offense (depending on how sure they want to be of grasping early opportunities). I’m not saying the outlook is positive. I’m saying conditions have changed such that caution is no longer as imperative.”
He added: “The bottom line for me is I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value,” he wrote. “I don’t find these statements inconsistent.”
Marks has an estimated net worth of $2.2bn. Born and raised in Queens, New York, he graduated from the prestigious Wharton School of Business to later on pursue a career in finance, specializing in distressed debt during his time working for the California-based asset management firm TCW Group.
Howard, along with four other partners, founded his own asset management firm Oaktree Capital in 1995, which currently manages more than $100bn in assets, specializing in alternative investments such as distressed debt and private equity.
