Oaktree launched the Value Equity strategy in 2012 as a step-out from our industry-leading Distressed Debt platform. Like the Distressed and Value Opportunities strategies, Value Equities employs a bottom-up, value-oriented investment approach focused on long-term principal appreciation and preservation of capital. The strategy seeks to achieve attractive, risk-adjusted returns by opportunistically assembling and managing an unleveraged, concentrated portfolio of stressed, post-reorganization and value equities that offer asymmetric return profiles.
Central to the strategy’s process is the identification of sound companies with substantial asset values or business franchises that are trading at a sizable discount to long-term intrinsic value due to short-term adversity or uncertainty. “Identifying and investing in a concentrated portfolio of out-of-favor stocks is Value Equities’ key to generating alpha,” says portfolio manager Patrick McCaney. “This is in contrast to managing a highly diversified equity fund where returns are generally far more beta-driven,” he adds. The strategy’s broad charter allows the team to look at equities across industries, market capitalizations and geographies within developed markets.
One of the strategy’s greatest assets is its daily collaboration with Oaktree’s experienced and highly regarded Distressed Debt team for supplemental industry and analytical insights in value investing opportunities.