Oaktree To Liquidate Crisis Fund, Eyes Euro. Opportunities

Mar 7 2011 | 9:26am ET

Oaktree Capital Management is liquidating the hedge fund it launched three years ago to take advantage of the financial crisis with distressed investments.

The Los Angeles-based firm began returning $3 billion from its $11 billion OCM Opportunities VIIb fund in January. Howard Marks, the firm's chairman, told Bloomberg News that there simply aren't the same kinds of opportunities available today for the fund, which has enjoyed annualized returns of 31%.

"People went in to the 2008 fund because we told them that was a great cyclical opportunity to make extremely high returns," he said. "But this kind of opportunity is not there in today's market, so I think we should return the money to investors and they can choose whether to come back into any of our new funds," such as the $1.6 billion U.S. mezzanine fund the firm raised in November.

Oaktree is returning capital from the Opportunities fund before the beginning of its liquidation period rather than reinvesting proceeds from asset sales.

Those investors who do choose to come back to Oaktree will likely be getting a steadier diet of European investments as opposed to U.S. investments, Marks said.

"The better opportunities lie in Europe, because banks have some purification job to do on their portfolios, and in mid-cap deals and also in debt related to commercial real estate," he explained. "We indicated to our investors in 2008 that a return before fees of more than 25% is possible. Today, you can't get that level of returns from traditional U.S. distressed debt."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Videos

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.