Story
Investing through Lehman: $450M a week when the world looked like it was ending
After Lehman collapsed in September 2008, Oaktree had no data or precedent, only supposition. They reasoned that if the financial world melted down, investing wouldn't matter, but if it didn't and they sat out, they'd have failed. So Bruce Karsh deployed $7 billion in one quarter.
“And what we said is that if the financial world melts down and we invest, doesn't matter. But if we don't invest and the financial world doesn't melt down, then we didn't do our job. So we have to do it. And we invested on that basis. And Bruce, who runs those funds, invested an average of $450 million a week for 15 weeks, $7 billion in a quarter.”
Framework
Cowboys vs. chickens: partnerships need shared values and complementary skills
Marks says lasting partnerships rest on shared values and complementary skills. Most of the banks on AT&T's IPO tombstone ad went under because cowboys and chickens blamed each other. He and Bruce Karsh have worked together for 39 years without a fight because each does what the other can't or won't.
“And eventually I think they almost all disappeared except for Goldman Sachs. But why do they go under? You have some cowboys and some chickens. And in bad times, the chickens say, the cowboys are getting us killed. And in good times, the cowboys say, the chickens are holding us back. And they disparage each other. So you have to share values, in my opinion. The other thing is you have to have complementary skills.”
Steal thisBefore partnering, test for matching risk appetite and ethics, then make sure each of you does things the other can't.