James Dondero Thinks Through Big Debt Deals, the Turnarounds, and the Emerging Trends

James Dondero is known for among many other things, for cofounding Highland Capital Management in 1993 where he serves as the president. Dondero boasts of more than 30 years of experience in the markets for credit and equity. His main focus is on CLO (Collateralized Loan Obligation) and the development of credit oriented solutions for both institutional and real investors across the globe. Besides earning the right to use the CFA (Chartered Financial Analyst) designation, James Dondero is a Certified Management Accountant. He graduated with the highest honors from the University of Virginia, McIntire School of Commerce, with dual majors in accounting and finance.


He is also the chairman of Cornerstone Healthcare, Nexbank, and CCS Medical. Dondero is also a board member of American Banknote and MGM Studios. He is deeply involved in philanthropy and usually supports causes in the areas of veteran’s affairs, public policy, and education. He started his career in 1984, working as an analyst in the Morgan Guaranty Training Program.


From his bio, James Dondero comes out as a person who loves progress. Dondero has successfully managed to grow Highlands Capital Management into a profitable alternative-asset powerhouse worth more than $15 billion. In an interview with Barron’s, James Dondero was hesitant to speak about himself. However, when pushed to talk, he said that his biggest strength as investor comes from solving puzzles. He takes the time to think through big debt deals, turnarounds, as well as emerging trends important to the firm’s investment approach.


Highland Capital Management provides mutual fund investors with liquid and relatively cheap access to some of its best ideas for investment. James Dondero curates these ideas through the Highland Global Allocation of $894 million. Over the past one year, the fund has grown by 29.6 percent. Sitting in the Morningstar’s world allocation class, Highland Global Allocation fund has little resemblance to the majority of its peers. The average world allocation funds hold close to 400 securities, but this fund has less than 200. Another thing that makes the fund stand out is the fact that approximately 40 percent of its assets are concentrated in several themes that range from one company to numerous companies operating in the same industry. According to Dondero, the assets can be placed in the overall portfolio, and consequently scratch the term theme. However, this would be like kidding oneself. The most recent themes are Argentina, master limited partnerships, and the restructuring of VSTE (Vistra Energy).


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