Highland Capital co-founder Mark Okada told CNBC he's happy to have avoided investing in Puerto Rico thus far, but now he may be taking a second glance.
"We're going to take a look, because they've just gotten crushed. I mean people are getting poured out of their trades." Okada, whose firm manages $15 billion, told CNBC's Leslie Picker on Wednesday at the Sohn Conference in San Francisco: "I think people are overreacting to what Trump said."
Puerto Rican bonds took a huge hit on Wednesday following President Donald Trump's comments on the island's sizable debt. On Tuesday night Trump told Fox News that the country's debt will have to be wiped out: "They owe a lot of money to your friends on Wall Street, and we're going to have to wipe that out."
The island's general obligation bonds, which yield 8 percent, dropped to just 37 cents on the dollar Wednesday. They remained near those levels on Thursday. Last month, the bonds were trading at around 56 cents to the dollar.
To be sure, Okada said, there may not be many assets to salvage.
"Puerto Rico kind of looked to us like a bad company with a bad balance sheet," said Okada. "It's hard to say that given the tragedy that they're facing. But really from an economic endgame, you really need to have growth, you need to have a viable economic picture to have anything to work out in distress."
"We're glad we're not in it."
Puerto Rico's financials had already been in hot water as the country struggles to cope with widespread damage from Hurricane Maria, which hit the island two weeks ago as a Category 4 storm. The hurricane wiped out much of the country's infrastructure, leaving 3.4 million still without reliable electricity or water.
Wednesday's Sohn conference is the West Coast version of the investment conferences that began in New York and are best known for hedge-fund managers making market-moving presentations. The Sohn conferences benefit pediatric cancer and other causes for underserved youth. The conference is presented in partnership with CNBC.