Oaktree Update

I looked at OAK over a year ago. At that time, I thought OAK was worth at least $38, and more likely close to $54 based on normalized earnings.

I added to the position earlier this year, when the price dipped to $40.

Over the past week or so it dipped back to the low $40s, after spending much of the year in the mid to upper 40s.

The overall narrative remains unchanged. It is a high-quality asset manager, focused on debt securities, which seeks to earn money the right way – by making outsized returns for its clients. With the stock market getting somewhat frothy, it remains poised to capitalize on any significant downturn or crash.

Valuation

I used the same template as the previous valuation. I used updated numbers from their Q3-2017 report for balance sheet items. For earnings, I used TTM numbers.

Screenshot from 2017-11-10 20-39-19

The year-to-year performance of OAK is quite lumpy. The IV increased from $38 to $66 based on TTM numbers. I believe that the average numbers are probably more reliable. They suggest that the IV remained roughly unchanged (increase from $54 to $57).

Based on these numbers, OAK is looking attractive at these levels.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s