James Dondero Describes How He Succeeds With Alternative Investments

spcblog, 18 April 2017, No comments
Categories: Business News

James Dondero initially made a name for himself in the financial industry as a pioneer in collateralized loan obligations. The company he co-founded, Highland Capital Management, now manages over $15 billion in alternative investments. Other investments he has found success in includes Argentina, American Airlines, and a bankrupt energy corporation.

While one would think that someone with as much career success as James Dondero would be brash and egotistical, he is actually rather introverted and more of a thinker then he is a talker. He has said his greatest asset is being able to solve puzzles such as turnarounds, emerging trends, and complex debt deal.

One of the mutual funds available through Highland Capital Management, and was designed by James Dondero, is their Highland Global Allocation fund (HCOAX). This popular fund is up almost 30% over the last year. This fund is quite different from its peers. Most hold about 400 securities while HCOAX holds less than 200. Additionally, it makes sector bets with up to 40% of its assets concentrated in a single company or just a dozen in one area of the economy.

After graduating from the University of Virgina, Dondero had planned to enter the field of real estate. Due to real estate market conditions at the time, he instead entered the financial industry and within five years he was working for American Express and managing a bond fund with $1 billion in assets. In 1993 he decided to found a company with his business partner, Mark Okada, and insurance company. This company, Highland Capital Management, started with only seven employees and was headquartered in Dallas, Texas. In 1997 Dondero and Okada purchased the insurance company’s ownership portion and now wholly own the company between them.

In 2012, James Dondero researched Argentina which at the time was experiencing huge financial difficulties. After two years of trips to the country and endless research, he decided that the country would soon turn things around. He purchased a large part of the country’s sovereign debt as a result which has paid off handsomely with a return of 120 cents on the dollar vs. 70 cents when he bought it.

 

 

 

 

 

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