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Howard Marks seeks ‘hidden gems’ in India in a world of low returns

Howard Marks, co-founder of distressed debt firm Oaktree Capital Management LLC, says he’s looking to find “hidden gems" in a world where too many buyers are driving returns down.

“Ever since the Fed and the Treasury and the world’s central banks rescued the global economy," and the Fed injected trillions of dollars into markets, investors have became “forced buyers," Marks said in a video interview Wednesday afternoon. That turned bargain hunting into a “very challenging" activity, he said.

Oaktree is one of the largest specialists in distressed debt, with about $37 billion committed to credit and private equity from troubled companies. The Los Angeles-based fund has thrived in times of economic stress, when bonds of companies in danger of defaulting fall to deep discounts.

Right now, the firm is trying to find “hidden gems" in “hairy" situations in private markets and outside the U.S., in places such as India, China, Europe, Latin America and emerging markets, Marks said.

A $15 billion fund raised last year “is not going to have a high return comparable to the returns we made in the three previous crises that we managed through," he said.

“The whole world is in this low return environment and the question is how do you behave in a low-return environment and the answer is that there’s no easy answer," he said.

In Latin America, Oaktree was among creditors from Argentine oil producer YPF SA in a debt restructuring earlier this year. It offered a $1.3 billion debtor-in-possession financing last year to the Chile-based Latam Airlines Group, which filed for Chapter 11 bankruptcy protection in the U.S. in May 2020.


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