Oaktree 2Q17 Earnings Call Notes

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Jay Steven Wintrob – Oaktree Capital Group LLC

Investors remained in a bullish mood

“Investors remained in a bullish mood in the second quarter buoyed by a relatively resilient U.S. economy, low interest rates around the globe, a surfeit of liquidity driven by accommodative monetary policies and low, expected and actual levels of volatility. The S&P 500 MSCI World and MSCI Emerging Markets indices were up 3%, 4% and 6%, respectively in the quarter and have appreciated 18%, 19% and 24%, respectively over the last 12 months.”

Exercising a high degree of caution

“So in short, it’s been a risk on market for most of the year and relatively high prices for almost every asset class reflect that. In this environment we continue to focus on obtaining attractive financing for, or selling mature assets in our portfolios, while exercising a high degree of caution in our security selection and deployment of dry powder.”

Living in a low return high risk world

“Markets normally respond to elevated uncertainty with lower asset prices and compensatorily higher returns. But that’s not what we are encountering today. We are living in a low-return, high risk world and an environment where most investors are happy to bear risk. Against this backdrop, Oaktree will continue to follow its 2012 mantra, move forward but with caution, and given today’s conditions, with even more caution than in the recent past. If one is going to invest at times like this, investment professionalism, knowing how to bear risk intelligently, striving for return while keeping an eagle eye on the potential adverse consequences is the most important thing.”