Highland Capital Management LP is a privately held Registered Investment Advisor (RIA). The firm, along with its affiliated offices, has reported nearly $20 billion in assets under management (AUM). It has maintained high standards when dealing with all investments, primarily the alternative investments it specializes in, for more than two decades. It manages fixed-income, equity and balanced mutual funds, investing worldwide in equity, fixed-income and alternative investment asset markets.
Headquartered in Dallas, Texas, Highland Capital Management was established in 1993. Co-founded by Mark Okada and Jim Dondero, the firm remains one of the largest and most experienced worldwide alternative investment management firms. It also has offices in New York, Singapore, Sao Paulo and Seoul.
There are a number of different investment focuses scrutinized by Highland. These include distressed credit, collateralized loan obligations (CLOs), high-yield bonds, structured products and private and public equities, among others. The firm invests most heavily in global public equity, fixed-income and hedging markets. However, it also focuses significantly on high-yield bonds, leveraged loans and structured products. Its other investments include natural resources, both long and short equities, and emerging market opportunities, among others.
Highland serves a large and diverse bouquet of clients. While many are high-net-worth individuals (HNWI), the firm also serves foundations and endowments, public pension plans, financial institutions and various governments and mutual fund investors. Among the closed-end funds it manages are the Highland Credit Strategy Fund (NYSE: HCF) and the Highland Distressed Opportunities Fund (NYSE: HCD).
Highland’s investment strategy has been gradually developed and refined throughout the more than 20 years the firm has been operating. It has honed its alternative investing process to accrue more alpha over time. It uses thorough, bottoms-up research across the portfolio, blended with a top-down view aimed at identifying investments with the highest potential return in various asset classes and market sectors.
Highland’s chief investment officer (CIO) Mark Okada, along with a portfolio manager, sets the top-down risk positions, as well as the portfolio’s risk targets. The firm prides itself on strong communication between executives, portfolio managers, researchers and analysts. It has focused its investment process on the ability to determine when assets have been priced incorrectly. This is accomplished with a proactive assiduity, aggressive and thorough fundamental analysis, constant monitoring and dexterous trading proficiency.
Highland's co-founders are its two primary executive team members. James Dondero, a Chartered Financial Analyst (CFA), is the firm's president. He has more than three decades of experience working in the equity and credit markets, and has specialized particularly in distressed and high-yield investments. He graduated with high honors from the University of Virginia's McIntire School of Commerce, with degrees in accounting and finance. He entered the financial field in 1984 as an analyst in the Morgan Guaranty Training Program. He also served as a corporate bond analyst, eventually moving up to the position of portfolio manager at American Express Company (NYSE: AXP). Just prior to founding Highland, he worked as a CIO of Protective Life. As a philanthropist, Dondero supports various public policy issues, veterans’ organizations and education initiatives.
Mark Okada, also a CFA and co-founder of Highland, acts as the firm’s CIO and the portfolio manager of the Highland Floating Rate Opportunities Fund. He oversees all of the firm’s investment activities throughout its gamut of strategies, and is often referred to as a leader and pioneer, developing bank loans from merely a specialty asset to an asset worth trillions of dollars. Having more than 30 years of experience with credit and alternative investments, he has been an extremely valuable team member, leader and mentor. In addition to being a fundamental figure at Highland, Okada serves in a number of other executive capacities, including his roles as the Director of NexBank and as a member of the Board of Directors for Education Is Freedom.
Highland’s investment team includes some 200 portfolio managers, analysts, researchers and associates. These members, along with other supporting employees, are dedicated associates with years of education, training and market experience. The typical portfolio manager at Highland has an average 11 years of experience in the financial and investment fields.