Books have been written about a few who made fortunes amid the collapse of the housing bubble and ensuing financial crisis, but what about those who bought at the bottom?
"Unless the second Great Depression lies ahead,” wrote Oaktree (OAK) Chairman Howard Marks to clients in October 2008, “today’s purchases should produce substantial returns, and in a few years we’ll reminisce together about how easy it was to take advantage of the bargains of 2008-09.” Marks spent 2007 circling the globe raising money ahead of what he was sure would be forthcoming bargains, and, along with partner Bruce Karsh, spent the weeks after the Lehman collapse putting it to work.
As for the timing being off as markets didn't bottom for another 6 months: “If God had told us to wait until March 9, 2009, because that would be the low, and we waited to buy then, we never would’ve been able to put that much money to work,” says Karsh.
Apollo's (APO) Josh Harris on his "loan to own" investment in LyondellBasell: “We bought the debt at 60 cents on the dollar, we bought more at 50, and then at 40. The low was 20. People were either panicked or forced sellers, and we bought from them all the way down.” Sitting on $500M in losses by year-end 2008, Harris pushed the chemical company into bankruptcy, converting Apollo's debt holdings into equity. The $2B investment eventually reaped $10B in profit, believed to be the largest gain ever on a P-E deal.
“Moments like 2008 will continue to present great opportunities for as long as emotion rules the markets,” says Marks. “In other words, forever.”