Howard Marks & Andrew Marks: Something of Value
Ben and David sit down with legendary investor Howard Marks of Oaktree Capital and his son Andrew who is also an incredibly accomplished investor in a very different arena: early-stage VC
Kyle’s Rating 5/10
The father-son dynamic between Howard and Andrew Marks offered a unique perspective on bridging generational investment philosophies, making their debate about value versus growth investing genuinely engaging. However, while the personal chemistry was compelling, the episode lacked the narrative depth and comprehensive analysis that make traditional Acquired episodes exceptional, feeling more like an interesting conversation than the meticulously crafted business stories the show typically delivers.
Howard & Andrew Marks
Howard Marks is co-founder and co-chairman of Oaktree Capital Management, managing $159 billion in alternative investments specializing in credit and distressed debt. Andrew Marks, his son, co-founded TQ Ventures, an early-stage VC firm with $1 billion AUM and top-decile returns. The episode centers on their co-authored memo “Something of Value,” written during COVID isolation, arguing value and growth investing are two sides of the same coin. It explores Howard’s credit career, Andrew’s shift from value to growth, family debates on market evolution, and anecdotes like high-yield bond epiphanies and poker analogies for markets. The narrative frames their father-son dialogue as bridging generational mindsets through open-mindedness and strategic evolution.
Notable Facts
Oaktree manages $159 billion AUM (June 2022), focused on distressed debt.
TQ Ventures has $1 billion AUM, including a $500 million third fund, with top-decile returns.
Howard has written ~160 memos since 1990; “Something of Value” is his most popular.
Howard pioneered high-yield bonds in 1978 at Citibank in a shunned market.
Andrew evolved from Buffett-inspired value investing to tech/growth, applying reinvestment principles to R&D.
Key Decisions
Pioneering high-yield bonds at Citibank (1978): Post-Nifty 50 bust, Howard led high-yield investing, finding undervalued bonds with excess yield offsetting defaults. Outcome: Steady profits, foundation for Oaktree. Analysis: Exploited ratings prejudice; contrarian edge via diversification and risk pricing mirrored insurance, shaping risk-averse credit leadership.
Co-founding Oaktree (1995): With four partners (averaging 9 years prior collaboration), launched focusing on distressed debt amid alternative demand. Outcome: Scaled to global leader; 2019 Brookfield deal preserved independence. Analysis: Complementary skills and respect built culture; equity distrust amplified impact.
Evolving from value to growth investing: Andrew shifted after recognizing high-return reinvestments in R&D/engineering beyond cash flows. Outcome: Founded TQ, backing high-upside founders. Analysis: Suited optimistic qualitative skill; public market inefficiencies pushed to private probabilistic bets.
Co-authoring “Something of Value” (2020): COVID family debates became Howard’s first co-authored memo, rejecting value-growth dichotomy. Outcome: Most popular memo, sparked discussion. Analysis: Andrew’s counterpoints drove Howard’s evolution; blurred styles via DCF integration.
Brookfield investment in Oaktree (2019): Brookfield took 62% (full public half, 20% employee), ensuring autonomy. Outcome: Liquidity options, resources, continued control. Analysis: Filled Brookfield’s credit gap; preserved culture amid alternative demand.
Key Quotes
“The companies we’re talking about are more complex… You have to really get deep.” (Howard; on Amazon/AWS). Analysis: Highlights management optionality over idiot-proof models; ties to growth reinvestment and increasing returns.
“Wasn’t it Mark Twain who said all generalizations are flawed including this one?” (Howard; on value vs. growth). Analysis: Rejects rigid dichotomy; promotes open-mindedness against Nifty 50-like prejudice.
“Readily available quantitative information about the present... is not going to give you the key to the castle.” (Howard; via Andrew). Analysis: Markets evolved like poker; qualitative future judgment beats ubiquitous data.
“If you see a chart of a stock that’s been up for 25 years… think of all the days you would have had to talk yourself out of selling.” (Andrew; on liquidity). Analysis: Challenges profit-taking; growth demands conviction in compounders.
“There are two reasons people sell things, because they’re up and because they’re down.” (Howard; on regret). Analysis: Critiques emotional selling; reframe as “unbuy” based on fundamentals.
Leadership Playbook
Open-mindedness and evolving thinking: Reject rigidity; adapt to accelerating markets. Shaped career shifts; counters prejudice in dynamic cycles.
Suit strategy to demeanor/skill set: Howard’s conservatism fit credit; Andrew’s optimism fit VC. Ensures durability via strengths/enjoyment.
Consistency over flash: Avoid bottom 5% (client story); builds trust in distressed/venture.
Additional Notes
Episode Metadata
Date: August 29, 2022
Duration: 1:31:27
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