Howard Marks & Andrew Marks: Something of Value

We sit down with legendary investor Howard Marks of Oaktree Capital and his son Andrew who, while less-well-known, is also an incredibly accomplished investor in a very different arena: early-stage VC. The purpose of the conversation was to discuss their joint work together on Howard’s all-time most popular memo, “Something of Value”, which made the then-shocking argument that Value and Growth investing are not diametric opposites but rather two sides of the same investing coin. We of course dive deep into that, and also cover plenty of fun Oaktree and investing history, as well as Andrew’s favorite topic: selling (or not selling, as the case may be). This is not one to miss! If you want more Acquired, you can follow our public LP Show feed in the podcast player of your choice (including Spotify!): http://pod.link/acquiredlp Links: The Original “Something of Value” Memo: https://www.oaktreecapital.com/docs/default-source/memos/something-of-value.pdf Howard and Andrew on Oaktree’s “The Memo” podcast: https://www.oaktreecapital.com/insights/memo-podcast/the-rewind-something-of-value Sponsors: Thanks to Vanta for being our presenting sponsor for this special episode. Vanta is the leader in automated security compliance – making SOC 2, HIPAA, GDPR, and more a breeze for startups and organizations of all sizes. You might say they’re like the “AWS of security and compliance”! Everyone in the Acquired community can get 10% off using this link: https://bit.ly/acquiredvanta Thank you as well to Brex and to Tiny: https://bit.ly/acquiredbrex https://bit.ly/acquiredtiny Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

David RosenthalhostBen GilberthostHoward Marksguest

Aug 29, 20221h 34mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

Value vs growth investing: open-mindedness, judgment, and selling discipline discussed

Howard Marks (Oaktree) and his son Andrew Marks (TQ Ventures) discuss their co-authored memo “Something of Value,” using a father–son dialogue to bridge classic value/credit frameworks with modern tech and venture realities.
A central theme is avoiding rigid labels (“value” vs “growth”) and instead grounding decisions in discounted future cash flows, price vs intrinsic value, and the need for second-level thinking amid increasingly efficient, information-rich markets.
They explore why disruption and accelerating technology change both increase uncertainty and expand upside through global and adjacent-market scale, making qualitative judgment about the future more important than ever.
The conversation culminates in a nuanced debate on selling: when taking profits is rational (capped upside) versus when it destroys returns (rare compounding machines), and how firm-building choices should match temperament and strengths.

IDEAS WORTH REMEMBERING

5 ideas

Don’t hardwire “value” vs “growth”—all equities are DCFs.

They argue every stock’s value is the discounted sum of future cash flows; the difference is how far out the cash flows are and how uncertain they are. Rigid style labels can blind investors to mispricings and changing business realities.

Open-mindedness is a core edge; rigidity is a profit killer.

Marks credits early high-yield success to going where others had rules and prejudices (“we don’t do that”). The memo’s throughline is evolving frameworks as the market/game changes.

Price matters as much as quality—great companies can be terrible investments.

The Nifty Fifty illustrates how “no price too high” thinking can lead to massive losses despite strong underlying businesses. Investing requires both forecasting business outcomes and comparing them to what’s already priced in.

Complex modern companies require deeper, less “knee-jerk” analysis.

Amazon is used to show how superficial income-statement conclusions missed favorable cash dynamics and strategic optionality (e.g., AWS). Today’s businesses often demand understanding reinvestment, cash conversion, and management-driven option value.

Disruption makes durability harder—but makes scale-based compounding more powerful.

They describe faster “Darwinism” (winners/losers faster) alongside increasing returns to scale (global distribution, adjacency expansion). The implication: fewer truly durable moats, but larger payoffs when they exist and are actively defended.

WORDS WORTH SAVING

5 quotes

When you go to an auction and you sit down, take your seat, and you see there are no other bidders… that’s usually a good thing.

— Howard Marks

Moody said, “These bonds are not proper for investment regardless of price.” How can that be?

— Howard Marks

If you see a chart of a stock that’s been up for twenty-five years… think of all the days you would’ve had to talk yourself out of selling.

— Andrew Marks

The path to exceptionality cannot come through doing what everybody else does.

— Howard Marks

Most people sell because they’re up or because they’re down.

— Howard Marks

Origins and success of the co-authored memoValue vs growth as a false dichotomyAmazon as optionality + cash flow misunderstanding case studyHigh-yield and distressed debt: contrarian opportunityMarket efficiency, information ubiquity, and second-level thinkingDisruption, moats, and accelerating changeSelling decisions, opportunity cost, and compoundingFirm-building: culture, partner fit, and incentivesVenture: founder evaluation and probabilistic returns

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