Oaktree's Marks Channels Yogi Berra, Novak Djokovic in Investing

  • Yankees catcher, who died last month, a model of `consistency'
  • No. 1 tennis player understands importance of self-confidence

Howard Marks spends more time in the office than on a baseball diamond or tennis court, but the billionaire investor is still inspired by lessons learned from sports.

"An investment career can feel like a basketball or football game with an unlimited number of quarters," the Oaktree Capital Group LLC co-founder wrote in a memo to clients Thursday. "Our record isn’t finalized until we leave the playing field for good."

Even if it isn’t finalized, Oaktree’s winning record has meant billions of dollars in profits for investors. The Los Angeles-based firm’s distressed-debt funds have produced annualized gains after fees of 17 percent, according to regulatory filings, and its open-end high-yield bond funds in the U.S. and Europe have generated returns of 8 percent to 9 percent a year since as early as 1986, when Marks oversaw some of the same funds at TCW Group.

Along the way, Marks has picked up numerous lessons from sports greats such as New York Yankees Hall of Famer Yogi Berra, who died last month, and world-No. 1 tennis player Novak Djokovic.

Error Minimization

Berra, who in 1959 completed a then-record 148-game errorless streak, "rarely messed up," Marks said. "Consistency and minimization of error are two of the attributes that characterized Yogi’s career" and "have always ranked high among my priorities and Oaktree’s, and they still do."

Maybe more important to Marks’s investing philosophy is an understanding of human behavior, which he says Berra demonstrated in life and Djokovic puts to use on the tennis court.

"The market is made up of people, and to beat it you have to know them as well as you do the thing you’re considering investing in," Marks wrote.

Djokovic, who won three of the four Grand Slam tournaments this year, exhibits a self-confidence that allows him to aim for lines and angles on the court that make the difference between a "winner" and an "unforced error," Marks said.

"To achieve great performance you have to believe in value that isn’t apparent to everyone else; buy things that others think are risky and uncertain; and buy them in amounts large enough that if they don’t work out they can lead to embarrassment," Marks wrote.

Marks, 69, started Oaktree in 1995 with Bruce Karsh and five other partners from TCW. His quarterly client memos discuss trends in finance, such as asset valuations and investment opportunities, as well as Marks’s views on risk and behavior. At least two previous letters -- in 2003 and 1995 -- were prompted by his observations from sports.