BRUCE KARSH

Bruce Karsh grew up in Durham, North Carolina, the son of a physician. He was a serious student — the kind of kid who ended up at Duke for undergrad and then headed to the University of Virginia School of Law.

After UVA he went into law briefly, clerking for a federal judge, which gave him something most investors never get: a deep understanding of how bankruptcy courts actually work. That legal training would turn out to be a core competitive advantage.

He made his first move into finance when he joined the TCW Group in 1987, working under Howard Marks in the high-yield bond department. Marks was already a legend in the making, and working alongside him shaped how Karsh thinks about risk, cycles, and the nature of market panics.

The two became intellectual partners, not just colleagues.

In 1995, Marks and Karsh left TCW with a small group of colleagues to found Oaktree Capital Management. The original team included six people.

They started with strategies they had already built at TCW — primarily high yield and convertible securities — and expanded into distressed debt, where Karsh would make his name. From the very beginning, Oaktree was built around the idea that avoiding losses matters more than chasing gains.

Karsh became the chief investment officer of Oaktree and the architect of its flagship distressed debt strategies. He guided the firm through the 1998 Russian debt crisis, the 2002 telecom bust, the 2008 financial crisis, and the COVID crash of 2020.

Each market dislocation was, for Karsh, a buying opportunity. That's not a cliché in his case — he literally deployed billions of dollars into distressed assets during the worst moments of each crisis, and came out the other side with extraordinary returns.

Oaktree went public in 2012, one of the first major alternative asset managers to do so. The IPO valued the firm at around $7 billion.

Brookfield Asset Management later acquired a majority stake in Oaktree in 2019 for approximately $4.7 billion, one of the largest deals in the alternative asset management space. Karsh remains co-chairman and continues to run the distressed debt portfolios.

Oaktree Capital Management is the headline. Karsh co-founded it in 1995 and it has grown into one of the largest alternative investment firms in the world, with over $170 billion in assets under management as of 2024.

The firm covers high yield bonds, convertible securities, real estate, infrastructure, and distressed debt — but distressed is the flagship, and that's Karsh's kingdom.

His Distressed Debt funds specifically are what earned him the reputation. The strategy involves buying the bonds or loans of companies that are in financial trouble — either already in bankruptcy or heading there fast.

Most investors sell when a company misses a payment. Karsh buys.

He then works through the restructuring process, often ending up with equity in the reorganized company. Done right, it's enormously profitable.

Done wrong, you're left holding worthless paper.

Beyond Oaktree, Karsh has been an active philanthropist through the Karsh Family Foundation, most visibly with a transformative $150 million gift to UCLA School of Law in 2016, which was renamed the UCLA School of Law — Karsh Institute of Democracy. He also co-owns the Los Angeles Clippers NBA franchise alongside Steve Ballmer, having been part of the ownership group that bought the team in 2014 for $2 billion after the Donald Sterling scandal forced a sale.

That purchase was the most expensive in NBA history at the time.

Karsh is a distressed debt investor, which means his entire approach is built around one idea: price determines everything. If you buy a good asset at a terrible price, you'll lose money.

If you buy a terrible asset at a good enough price, you'll make money. He operates at the extreme end of that second scenario.

Think of it this way: imagine a shopping mall that's losing tenants and heading toward bankruptcy. The landlord's mortgage has dropped in price from $1 to 40 cents on the dollar because everyone thinks the whole thing is going under.

Karsh will buy that mortgage at 40 cents. If the mall survives restructuring, the mortgage might be worth 80 cents.

If it gets converted into equity in the new entity, he might own the mall itself. Either way, he bought at such a deep discount that the math works even if things stay messy.

What gives him an edge is the legal knowledge. Bankruptcy is not just a financial process — it's a legal one.

The hierarchy of who gets paid first, how claims are structured, what judges will allow, how committees form — this is enormously complex. Most investors don't understand it.

Karsh does, because he trained as a lawyer before he was an investor. That background lets him see value in claims that others find impenetrable.

He is also deeply cycle-aware. He doesn't buy distressed assets all the time — he buys them when credit markets have seized up and fear is driving prices to irrational levels.

During normal markets, he is patient. During panics, he moves fast and at scale.

In 2008, Oaktree raised one of the largest distressed debt funds in history at exactly the right moment.

He is not a quant, not a momentum trader, and not a growth investor. He thinks about downside first, always.

'What's the worst that happens here?' is the first question he asks about any investment, not 'how high can this go?'

The 2008-2009 distressed debt cycle was Karsh's defining moment. In late 2007 and into 2008, as credit markets began to collapse, Oaktree was raising Distressed Debt Fund VIII.

By the time Lehman Brothers fell in September 2008 and markets went into freefall, Oaktree had over $10 billion ready to deploy. Karsh moved aggressively, buying distressed corporate bonds, leveraged loans, and bank debt at extraordinary discounts — often 30 to 60 cents on the dollar on assets that would recover substantially.

The returns were staggering. The fund generated returns well above 20% net to investors over its life, turning the worst financial crisis in 80 years into one of the most profitable periods in Oaktree's history.

Investors who stayed committed to Oaktree through 2008 — when distressed portfolios were showing paper losses and the world looked genuinely terrifying — were rewarded with returns that most equity funds couldn't match over a decade.

What made this a great win wasn't just luck or timing. Karsh had spent years building the expertise, the legal team, and the investor base to be able to raise and deploy capital at exactly the moment when everyone else was in paralysis.

The preparation was the win. The crisis was just the moment it paid off.

Karsh has been fairly private about specific losing positions, but Oaktree's distressed strategy has not been immune to error. The energy sector collapse of 2015-2016 caught a number of distressed investors who moved in too early, assuming that oil prices at $60 were already discounting the worst.

They weren't. Prices kept falling, and companies that looked cheap at $60 oil were in serious trouble at $30 oil.

Oaktree deployed capital into energy-related distressed situations during this period and some of those positions took meaningful losses as the cycle extended beyond what most models anticipated. While exact fund-level losses on specific energy names haven't been publicly disclosed, industry estimates suggest that energy-related distressed bets cost several major distressed funds including Oaktree's strategies hundreds of millions in write-downs between 2015 and 2017.

The lesson Karsh drew from the energy experience — and has discussed in investor letters through Howard Marks's commentary — is that commodity-driven distress is fundamentally different from operationally-driven distress. When a company's problems are cyclical and macro, you can't underwrite a recovery with the same confidence as when the problems are structural and company-specific.

Energy adds a variable — the commodity price — that no legal analysis can resolve.

Karsh operates from a set of principles that are deeply Oaktree in flavor — which makes sense, since he helped build them alongside Howard Marks. The core belief is that risk control comes first.

If you don't lose big, the wins take care of themselves over time.

He believes that the best investments happen when there's a gap between price and value — and that gap is almost always widest during moments of maximum fear and market dysfunction. When credit markets freeze up and investors are selling anything with a whiff of risk, that's when the most mispriced assets appear.

Being ready to act in those moments, with dry powder and conviction, is where fortunes are made.

He also believes that most investors underestimate legal and structural complexity. A bond isn't just a claim — it's a legal instrument with specific rights in a specific hierarchy.

Understanding that hierarchy in detail is what separates a distressed investor who makes money from one who gets wiped out.

On cycles: Karsh believes credit markets are deeply cyclical, and that the biggest mistake investors make is assuming the current environment will last forever. When credit is loose, standards loosen, prices rise, and risk builds invisibly.

When it snaps back, the overleveraged get destroyed — and the prepared pick up the pieces. He has lived through enough cycles to be genuinely immune to the euphoria of a credit boom.

He's also pragmatic about fees and structure. He has said that investors deserve alignment — which is why Oaktree's team puts meaningful personal capital into its own funds.

When the people running the money have real skin in the game, the incentives change.

Karsh has been married to Norie Karsh for decades. They have three children together.

Norie is a significant partner in their philanthropic work — the Karsh Family Foundation reflects both of their priorities, with a heavy emphasis on education, democracy, and the arts.

His brother is Andrew Karsh, also a lawyer, reflecting the family's orientation toward law. Bruce has spoken about his father's influence — growing up in a household that valued education and community gave him both the drive to succeed and the conviction that success carries an obligation to give back.

The family's most visible legacy is the Karsh Institute of Democracy at UCLA, which does research on democratic institutions and civic engagement — a cause that reflects real conviction about the role of institutions in society, not just a name on a building.

Karsh attended Duke University for his undergraduate degree. From there he went to the University of Virginia School of Law, where he earned his J.D.

After graduating, he clerked for Judge Anthony Kennedy on the U.S. Court of Appeals for the Ninth Circuit — before Kennedy was elevated to the Supreme Court.

That clerkship was formative. Learning how federal courts actually process bankruptcy and financial disputes gave Karsh a structural understanding of legal risk that almost no investor has.

It's not an exaggeration to say that clerkship is one of the reasons his distressed strategy works.

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