James Dondero, the founder, and CEO of the Dallas-based investment firm Highland Capital Management knows a lot about emerging markets. Highland Capital Management has been investing in emerging markets for more than 20 years, and Dondero has been the catalyst for the success the company has experienced in those markets. Dondero is one of the old school financial managers. Dondero holds an accounting degree, and he cut his teeth on foreign market investments when he worked for American Express in Europe.
One of the first investments that James Dondero made when Highland Capital Management got started was in the Asian market. Dondero knew that China and other Asian countries had the ingredients to help fuel the global economy, and Dondero wanted to be a part of the growth in those markets. Highland Capital Management has more than $19 billion in assets under management, and a large number of those assets are in Asia. Dondero decided to open offices in Singapore and Seoul as well as in New York and Sao Paulo so Highland Capital could react to the changes that take place in emerging markets. One of the biggest negative investment changes has been in China over the last five years. Jim thinks China is still going to have an impact on investors for the next several years.
Many economists think China is going to throw the world into another great recession, and it may be as bad as the 2008 economic meltdown. Mr. Dondero thinks China’s slow manufacturing sector and large bank debt will be the catalysts for a major global economic downturn. But Highland Capital Management is prepared for that downturn, according to Dondero. The company has gotten rid of assets that will feel the brunt of the hard times in China. Dondero is focusing on Argentina, India and Mexico and Highland Capital is investing in those countries. To date, Highland Capital has more than $4 billion invested in Argentina, and that number will increase when the new Argentinian bonds go up for sale.
James has a history of selling and buying assets at the right time. The risks may be higher now, but that’s when the returns are greater, according to Dondero.
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