Brookfield Oaktree Holdings, LLC (NYSE: OAK-PA) is a leading global alternative investment management firm that specializes in credit, private equity, real assets, and listed equities. The company has a long history of delivering strong investment performance for its clients, with a focus on risk control, consistency, and specialization.
Business Overview
Brookfield Oaktree Holdings, LLC, formerly known as Oaktree Capital Group, LLC, was formed in 1995 by a group of individuals who had been investing together since the mid-1980s. The company's founders were pioneers in the management of high yield bonds, convertible securities, and distressed debt. Over the years, Oaktree has developed a diversified mix of specialized credit- and equity-oriented strategies.Oaktree operates according to a unifying investment philosophy that emphasizes risk control, consistency, market inefficiency, specialization, bottom-up analysis, and a disavowal of market timing. This approach, combined with a collaborative and disciplined culture, has allowed the firm to generate consistent returns for its clients across various market environments.
Financial Performance
Brookfield Oaktree Holdings, LLC has demonstrated strong financial performance over the years. In the latest fiscal year, the company reported annual revenue of $540,166,000, annual net income of $354,373,000, annual operating cash flow of $487,008,000, and annual free cash flow of $476,008,000.For the first quarter of 2024, the company reported incentive income of $115,329,000, up from $59,401,000 in the same period of the prior year. This increase was primarily due to larger tax-related distributions from the company's credit and private equity closed-end funds.
Incentive Income and Accrued Incentives
Incentive income is a key driver of Brookfield Oaktree Holdings, LLC's financial performance. The company earns incentive income from the investment advisory services it provides to its clients, primarily from the closed-end funds and certain evergreen funds it manages.As of March 31, 2024, the company had $1,911,518,000 in accrued incentives, up from $1,824,320,000 as of the same date in the prior year. This increase was primarily due to $192,325,000 in incentives created during the first quarter of 2024, partially offset by $120,359,000 in incentive income recognized by the company.
Incentive-creating Assets Under Management
Brookfield Oaktree Holdings, LLC's incentive-creating assets under management (AUM) totaled $55,401,000,000 as of March 31, 2024, up from $54,839,000,000 as of December 31, 2023. This increase was driven by $1,200,000,000 in market appreciation, partially offset by $600,000,000 in net distributions during the first quarter of 2024.Consolidated Funds and Investments
As of March 31, 2024, the company had $6,360,836,000 in assets of consolidated funds, including $5,771,776,000 in investments at fair value. These investments are diversified across various sectors and geographies, with the largest exposures being in the United States (66.6%), Europe (8.1%), and Asia and other regions (25.3%).The company's corporate investments, which include its investments in Oaktree funds and other third-party funds and companies, totaled $1,438,991,000 as of March 31, 2024, down from $1,532,208,000 as of December 31, 2023. This decrease was primarily due to a $92,449,000 decline in the company's credit and private equity fund investments.
Liquidity and Capital Resources
Brookfield Oaktree Holdings, LLC maintains a strong liquidity position to support its operations and investment activities. As of March 31, 2024, the company had $308,134,000 in cash and U.S. Treasury and other securities, and $217,040,000 in outstanding debt.The company's primary sources of liquidity include incentive income, distributions from its corporate investments, and proceeds from equity and debt issuances. These funds are used to pay compensation and related expenses, service fees under the Services Agreement with OCM, service debt, and make distributions to unitholders.