The Awe-Inspiring Story Behind James Dondero’s Claim to Financial Fame

James Dondero is currently the president of Highland Capital Management, which currently manages about $18 billion of assets. Mr. Dondero has held the helm of Highland Capital Management for 20 years, has won several awards, and belongs to the board of directors of a number of companies. However, in the financial world, Dondero is arguably best known for popularizing collateralized loan obligations, or CLOs, for short. CLOs are securities that feature collateral in the form of large companies’ loans, a relatively new type of security, dating back only twenty years. But how did Mr. James “Jim” Dondero, leader of several business entities and organizations, earn his proverbial stripes?

Young James Dondero enrolled in the University of Virginia’s college of business, opting to study both finance and accounting. Many people preparing themselves for careers in accounting do this, often satisfying their state accountancy boards’ educational requirements. He graduated with two bachelor’s degrees from his originally intended fields of study, accounting and finance, with highest honors. Although Mr. Dondero did end up earning a CMA, or Certified Management Accountant certification, he never once practiced accounting, instead opting for a soon-to-be illustrious career in finance.

A few months prior to graduation, Mr. Dondero landed an internship as a financial analyst with Morgan Guaranty, today known as J.P. Morgan & Trust, in 1984. James Dondero remained within the financial servicer’s lower ranks for just less than a year prior to getting hired by American Express, one of America’s largest loan and credit providers.

Mr. Dondero was employed by American Express for four years, moving up from a corporate bond analyzer to a portfolio manager. In his final year of employment with the organization, he managed one billion dollars’ worth of stable cash inflow pools.

In 1989, Protective Life Insurance Company founded a insurance providing subsidiary named GIC. James Dondero was chosen as GIC’s chief investment officer, helping the brand new organization sprout an endowment of two billion dollars. Dondero and Mark Okada bought a 40% stake in a partnership between the two financiers and Protective Life. With help from business partner Mark Okada, Dondero eventually bought out the entire company, in 1998 renaming the organization to Highland Capital Management.

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