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Important to consider all sides, so I follow this blog: https://www.privatedebtnews.org/p/private-credit-news-weekly-issue-d7b It covers BDCs, alt asset managers, private equity/credit/banking, and more with a very critical eye. Easy to read either the intro or conclusion without hitting the mid sections: (From the conclusion) Blue Owl scrapping its BDC merger after investor backlash demonstrates what happens when market stress meets structural complexity. The math wasn’t complex: merging a private fund into a vehicle trading at 20% discount to NAV meant immediate losses for one set of investors. That Blue Owl thought it could execute the deal until “negative articles” intervened suggests management misjudged how closely the market is watching. The BlackRock Baker CLO failing its OC test and requiring fee waivers shows stress manifesting through structures designed to be self-correcting. When a CLO holds Renovo debt that went from 100 cents to zero in weeks, plus loans to bankrupt Astra and lender-owned Pluralsight, the self-correction mechanism kicks in by redirecting cash from risky tranches to safer ones. The junior bonds have continuously failed OC tests since April 2024. That’s not a one-time breach. That’s a portfolio under sustained pressure. The 48Forty situation, where lenders swap $1 billion of debt for equity roughly a year after providing $1.75 billion for an acquisition, captures the current cycle’s dynamics. Summit Partners bought the business in 2022 with private credit financing. By 2025, the company stopped paying interest entirely and lenders are taking the keys. FS KKR marking the loan at 46 cents from 86 cents a year ago shows how quickly valuations move once performance deteriorates. UBS projecting private credit defaults to rise 3 percentage points versus 1 percentage point for leveraged loans and high-yield provides a quantified outlook for relative stress. The bank’s AI analysis is particularly notable: 30% impairment risk if AI falters, 40% if AI succeeds too disruptively. Either scenario creates problems. Gundlach calling private credit “garbage lending” with “only two prices, 100 or zero” echoes what the Renovo and 48Forty marks demonstrate: valuations hold until they don’t, then move violently. His comparison to 2006 subprime is provocative but the mechanics he describes, illiquid assets backing liquidity promises, are real. JPMorgan writing $20 billion checks for EA while private credit CLOs fail OC tests captures the bifurcation. Banks are competing aggressively for credits they want while avoiding those they don’t. Private credit holds what’s left. Fortress’s McKnight is right that stress will separate winners from losers. The separation is already underway.

https://michaeljburry.substack.com/p/the-cardinal-sign-of-a-bubble-supply Cassandra of myth was doomed to tell truths no one would believe. Probably folly to think you can do the same…

I did a google search for alternative asset manager primer and this looks like a reasonable place to start: https://alexandersteinberg.substack.com/p/a-primer-on-alternative-asset-managers Without much exaggeration, alternative asset managers are all about fees. For asset-light managers, various fees dwarf other income sources. Asset-heavy managers also benefit from returns on their own capital but still rely on fees as the most consistent and valuable part of their business.

This was originally posted in the Investment Ideas - BN thread: Here is a dour presentation on the state of private equity & credit: https://lt3000.blogspot.com/2025/11/my-last-few-blog-articles-have-been-on.html There is a difference between investing in PE and investing in the actual asset managers, but the fate of the managers has to be tied to PE performance in some respects. This could have been posted in the APO, OWL, or any of several other threads. Hopefully there’s overlap of readers.

Alternative Asset Managers deserve their own topic. There are many flavors here, but these firms specialize in managing and investing in assets outside of traditional stocks and bonds. Things like private equity, hedge funds, real estate, infrastructure, commodities, venture capital, and more. Several public ally traded names: BX, ARES, APO, KKR, BN, CG, HLNE, OWL, MC, PX, TPG I am sure there are more, and firms like GS, Morgan Stanley, Blackrock and other banks dabble in alternatives. I have owned KKR, BN and APO for 10-15 years. These companies have been good to me.

Drinking morning coffee while doing a crossword on the deck. John Coltrane on the Sonos. I could do that every day. Wait, I do indeed do that everyday. Except sometimes the weather doesn’t cooperate and I switch between jazz and blues sometimes. and I don’t mind admitting that I sometimes search for answers on the internet when I get stuck.

Quick read from The Transcript of some Klarman quotes from the interview https://thetranscript.substack.com/p/seth-klarman-interview read some, and maybe you’ll want to invest an hour in the video. (I didn’t)

Short report of backpacking trip...basically 20 miles in two day, first day saw sleet at times. We had two stream crossings where water was up to 2 feet deep. Very cold, and the first time these scouts had ever needed to do stream crossings like that. Temp first night got down to 24 F, second night was low of 40ish. There were some nice steep hills for Missouri, good training for Philmont, but we will see much larger elevation changes there. Overall, we were well prepared for this trip. On the way home I heard a story on NPR about first order and second order fun. First order fun is instant gratification stuff, going to a movie, having a nice dinner, video games, etc. Second order fun is stuff that maybe didn’t seem fun at the time, but looking back afterward was. Things like running a marathon or anything that takes work but leads to a great sense of accomplishment. (Nailing an equity analysis thesis and having your stuff go up?) timing of the story was perfect.

Adding a teaspoon or so of microplaned lime zest to a pitcher of margaritas is real nice. There are some oils and other compounds that steep into the drink. Strain it out if little chewy bits bug you.

14 year old son has spring break this week, so we are going backpacking for two night trip. We head out with a few other scout leaders and sons, doing a Philmont shakedown. Wife, son and I have a 12 trek this summer. I often sleep better in a tent than in my own bed.

A similar situation happened, to a smaller dollar amount in coal. BTU had to post $534 million to satisfy margin requirements on derivative contracts after coal surged 200%+ since the end of 2021: https://finance.yahoo.com/news/peabody-announces-financing-arrangement-135400730.html

Men Faber has talked about this a few times: https://mebfaber.com/2021/07/01/journey-to-100x/ “I began putting money into private companies back in 2014. AngelList was, and remains, my primary platform, though I’ve done deals through a handful of other platforms including WeFunder, EquityZen, Republic, BioVerge, and Jason Calacanis’s syndicate. I’ve also co-invested with friends like Howard Lindzon, and made various direct investments with founders I know.” Might be a few other resources linked in the article.

Enjoyed this write up: https://valuepunks.substack.com/p/deep-dive-hdfc-bank-hdb-us Unless i misunderstood, author is from WhiteFalcon.

Is it just me, or does the site not work with iPad?

Piedmont Natural Gas (PNY) was bought by Duke in 2016. Sure it was a sleepy utility stock, but I participated in their DRIP program for something like 15 years buying $200/month. They offered 5% discount on reinvested shares. Sure would have been nice to let that run on auto.

Back to the value stock rotation...here’s a brief take on the rotation happening during the tech bubble: https://www.albertbridgecapital.com/post/if-growth-stocks-sell-off-will-they-bring-value-stocks-down-with-them

KNOP has a 12% distribution with a large portion of it RoC. (I think there is a thread in investing ideas here) A few BDCs I’ve owned in the past have had a mix of unqualified dividend and RoC

I’ve only sort of skimmed this, but this likes a good starting point for an array of relevant material. It’s aimed toward MBA interns, so perhaps a touch advanced for someone brand new. Contains lots of TL:DR summaries of embedded links to articles, books, research pieces, etc. https://mcusercontent.com/6dc62f307511d466ff78a94fe/files/08f2139c-5671-bfe3-fcd6-17ea31f9a85a/Verdad_Curriculum_v8.pdf

<I’ve heard of fever tree but can’t ever find it near me. Can only find tonic in generic half liters which always pisses me off because it goes flat. > pick up a sodastream and order Jack Rudy’s tonic syrup. That you can always have fizzy tonic. Jack Rudy’s has some other products, but I’ve never tried them: https://jackrudycocktailco.com/?gclid=CjwKCAjw7fuJBhBdEiwA2lLMYWqAivD5AJVF1XVqDmO-KBIxWgXcuKTevdLsDAJzME8l0EgdO89YWRoCXN4QAvD_BwE

Noticed this article on Morningstar: https://www.morningstar.com/articles/1040717/which-charities-deserve-your-dollars

There was a blog post on “what happened to Bruce Berkowitz about a month ago. Success leads to overconfidence in abilities that maybe weren’t all that in the first place. Bruce Berkowitz: From Morningstar Manager of the Decade to 15 Years of Underperformance https://canuck-analyst.blogspot.com/2021/02/bruce-berkowitz-from-morningstar.html Lots of nice stuff in there. I think Munger has said the best way to learn is from other’s mistakes.

I'm pretty sure Charlie just called us a bunch of weirdos... I wish he had his own section every year.

The corollary to that is " my losses have been 95% bad luck"...

Anyone debating around Shiller CAPE should read this guys work: http://www.philosophicaleconomics.com/2014/11/dilution-index-evolution-and-the-shiller-cape-anatomy-of-a-post-crisis-value-trap/ Basic conclusion: CAPE should be used with caution for any country exposed to boom/bust in credit....which is, of course, every country in the world.