Keith bought Oaktree Capital (OAK) for the Virtual Portfolio yesterday and today, Hedgeye Financials Sector Head Josh Steiner is backing up the call. Oaktree is one of the few publicly traded alternative asset management firms out there. You’ve seen us buy and sell Och-Ziff (OZM) before and now we’re long Oaktree. Why?
Alternative asset managers (read: hedge funds) perform well in periods of quantitative easing. Seeing as how the Fed just extended QE3, this is likely to be a positive period for OAK. During QE1 alternative asset managers were the fifth best performing subsector (out of 31), rising 183% in absolute terms and outperforming the XLF by 102%. During QE2 it was the best performing subsector, rising 69% in absolute terms and outperforming the XLF by 42%.
The stock also has a dividend yield of 8.1% and Oaktree has seen its assets under management grow rapidly over the past five years by 16.1%.