In his recent discussion on OakTree’s The Rewind Podcast, Howard Marks reflects on his memo titled – It’s All a Big Mistake, which was originally published on June 20, 2012. Here’s an excerpt from the podcast:
Q4 2021 hedge fund letters, conferences and more
Marks: Bob says so many interesting things that I sit here wanting to jump in and add, which of course the great news is I get to do. Number one because we make mistakes, because we’re all human and we all make mistakes, it’s great to operate in a strategy which is inherently anti-error.
Number one, fixed income in general is anti-error because you have the promise of repayment, in the distressed debt area the promise of payment may be out the window, but at least you are higher in the capital structure.
Sometimes you have assets if not collateralizing the debt then at least a raid behind it. You have this aspect that I mentioned before. And as Bob just mentioned, nobody looks at distressed debt from the outside and says, oh everything’s honky-dory.
The greatest thing in investing in general is to find an asset, or an asset class, that looks scary from the outside. So people shun it. But on Investigation is not as scary as they think.
You lose money when you overestimate the merits, you give up opportunities when you overestimate the problems.
You can listen to the entire discussion here:
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Article by Johnny Hopkins, The Acquirer’s Multiple.
