Institutions Flood Private Credit as Retail Walks Away
Investors can be prorated on the way in too. “COF V is Blackstone’s largest opportunistic credit fund raised to date, reflecting continued strong institutional demand for private credit." Institutional investors piling in to private credit as retail flees. https://t.co/gjHIJ7Kg2B
M&A Surge: Blackstone Deal, SCII LOI, Two $200M IPOs
Today's M&A and SPAC notes $HOLX / Blackstone / TPG deal closed $SCII entered LOI with a payments technology company $ACGCU $200 million IPO $AACPU $150 million IPO https://t.co/094cl5qlvH
FTC Shifts to Divestiture‑First, Settlement‑Driven M&A Policy
On Friday, the Federal Trade Commission published its 5-year strategic plan under Chair Andrew Ferguson The most notable change is the FTC's strategy to reasonably regulate M&A from an antitrust perspective, highlighting their new policy to "prioritize divestitures" and "engage in...
Now Is Prime Time for Fresh Private Credit Capital
Quite the opportune time to be putting fresh capital to work in private credit. https://t.co/JSc6jmY0Rb
HOLX at Buyout Price, CVR Lottery Offers Tiny Upside
The Hologic buyout by Blackstone / TPG at $76.00+CVR is expected to close tomorrow With the stock trading at $76.01, you can get a lottery ticket that'll pay as much as $3.00 for $0.01 (CVR payout based on Breast Health division...
Rising Private Credit Redemptions Signal Potential Trouble
My latest memo on the private credit market: Redemptions Are Climbing — Is That a Problem? https://t.co/QbeBHZNKir https://t.co/0CaMneVvAU
Closed Markets Make Today Ideal for Bad News Filings
While North American stock exchanges are closed, EDGAR is open. - and it is probably the best day of the year for a public company to file a bad news 8-K. So yes, all analysts working today.
Coke Now Outprices Microsoft, Defying Gates' Logic
Bill Gates once argued that tech stocks should trade at lower multiples than consumer staples, due to disruption risk. Nearly 30 years later, $KO is trading at a premium to $MSFT https://t.co/kvxe5UxICA
OCIC Redemption Spike Covered by Quarterly Tender Liquidity
Blue Owl's non traded BDC, OCIC, received redemption requests for 21.9% of the fund. Is it cooked? No, it'll be fine. Here's why: 1) Portfolio turnover and 5% quarterly tender - OCIC tenders for 5% of its fund each quarter (20% per annum),...
Medallia Loan Collapse Erases $5.1B Equity, Media Silent
Medallia loan value continues to decline, with latest marks at 69. With the term loan in distress, the $5.1 billion of equity has certainly been vaporized. This -100% private equity loss surpasses any private credit loss by an order of magnitude. Where's...
Deep Discounts Drive High Redemption Tenders in Blue Owl Funds
Blue Owl Credit Income (OCIC) with 21.9% tendering for redemption and Blue Owl Technology Income (OTIC) with 40.7% tendering for redemption makes sense as both have publicly-traded "sister" funds that trade at large discounts to NAV: Blue Owl Capital $OBDC trades...
March Hurts Long‑short Equity; April Rebounds Sharply
March was a challenging month for long short equity hedge funds as junk stock shorts materially outperformed (+7bps on the month). The GS VIP Long vs GS Most Shorted basket fell -7.6%, dropping its YTD performance to -14.4%. That said, April is...
Denies Air Canada CEO Rumors, No Acceptance Plans
PERSONAL UPDATE: I want to address the rumors and media speculation that I recently interviewed for the position of CEO at Air Canada, and the below picture of my response when they asked about my french skills. As it currently stands,...
Private Credit Wins: Sixth Street Secures Prepayment Fee
Looks like some private credit is good. With Apellis $APLS set to be acquired by Biogen $BIIB, Sixth Street $TSLX is likely to earn a prepayment fee on its term loan (which is at SOFR + 575). https://t.co/AS5W0OFzUn
Strong SaaS Growth Offsets Multiple Contraction
While SaaS multiples have contracted meaningfully, 20-30% revenue CAGR since 2021 means that revenue has increased 150-250%, counteracting much of the multiple contraction from an LTV perspective (assuming no dividend recaps). Growth solves a lot of problems over time.
Boards Can't Unilaterally Cancel Mergers; Shareholder Vote Required
I am dumbfounded that an institutional investor could think that a board of directors can just terminate a definitive merger agreement. I am even more shocked that they would admit this publicly in the media. For the uninitiated, a merger agreement can...
BDC Discounts Suggest Default Rates 5‑10× GFC Levels
Historical recovery rates for middle market direct lending is 65% to 85%. Currently, if one assumes this recovery rate holds, listed BDCs trading at an average -25% discount to NAV imply a 34% to 79% cumulative default rate, which is 5x...
Software Loans Keep Default Rates Below 2% Amid AI Panic
AI fears have flipped the direct lending business on its head. Historically, software has exhibited the lowest default rate in private credit at 1.4%, below the average of 2-3%. https://t.co/Ff7NdOcqJI
Conflict Launched Without Planning or Analysis
It's as if zero planning or thoughtful analysis occurred prior to launching the conflict. https://t.co/agSNYIA2oJ
BDC's Top Holding: SpaceX Stock at 30% Discount
Wait until they find out that a certain BDC’s largest position is SpaceX stock and its trading -30% below NAV
Brookfield Leads $9B Deal as M&A Spree Continues
Today's M&A notes $BLX.to to be acquired by Brookfield / La Caisse for $37.25 cash per share, 31.8% premium, $9.0 billion $TERN to be acquired by MRK for $53.00 cash per share, 6.0% premium, $5.7 billion $JHG / Trian bumped bid by 6.1%...
AI Agents Deliver Rapid, Superior Merger Arbitrage Insights
The $TERN / $MRK deal announced this morning provides a good case study on how Accelerate's AI agents quickly analyze a merger arbitrage investment opportunity: - Equity research agent: Paste target ticker. Agent generates an initiating coverage report on the target. -...
Private Credit's Circular Lending: Cliffwater Borrows From Itself
The circular relationships within the private credit ecosystem are fascinating. For example, Cliffwater invests in Carlyle's private credit fund. On the other end, Carlyle's private credit fund lends to Cliffwater (first lien loan shown below). So it appears that ultimately, Cliffwater is lending...
OpenAI's 17.5% Guaranteed Return Claim Seems Dubious
I have trouble believing that OpenAI is offering PE firms a "guaranteed minimum return of 17.5%" on preferred shares. This is the rate offered by highly distressed firms or those in contentious bankruptcies - not a firm operating as a going...
Political Clout Now Trumps Antitrust in M&A
There is a new meta for merger arbitrageurs, such that traditional antitrust analysis is outweighed by the acquiror's political clout. In particular, if the acquiror employs Mike Davis, their M&A deal is getting done. https://t.co/B0QuYUxxv2
Cut Fees, Buy Back Shares, Avoid Nontraded BDCs
My thoughts on how private credit mangers can rebuild investor confidence in this weekend's @barronsonline: First, they should cut fees: "A lower fee structure would go a long way toward improving managers’ standing with investors". Investors will return to the asset...
Media Overlooks the Growing Syndicated Loan Market
It is as if the media is unaware of the broadly syndicated loan market https://t.co/7VASp4fFsN
Iran War Drives Market
Due to the war in Iran and the resulting inflationary effects, the market is now pricing in zero rate cuts from the Fed this year (in contrast to the previously forecast two rate cuts). Moreover, the market is now forecasting a...
Prorating Vs. Gating: Different Tender Offer Mechanics
Prorating investors in a standard 5% quarterly tender offer is not the same as gating or halting redemptions. https://t.co/p9tLyxgsOi
AGs Sue, Deal Closes Same Day: TGNA Winners
State AGs sue to block the merger in the am, deal closes in the pm. Wild ride for $TGNA shareholders - congrats to those who held for $22.00. https://t.co/hroSGkpRRo
Iran War Slashes US M&A Deals by Half
The war in Iran has had a significant impact on the merger market. Month-to-date, just 6 public US M&A deals have been announced (worth a total of $56 billion), down -65% in number and -44% in value compared to last month....
Liquidity, Not Credit, Drives Crises; Public BDCs Undervalued
If you read one thing on private credit today, make it Sixth Street's investor letter. The highlights: “Crises don’t happen because of credit issues, they happen because of liquidity issues. "If you believe in efficient markets, public BDCs trading at significant discounts...
IRR Overstates Private Equity Returns, Shows 20% ≈ 12%
The most important concept for allocators to understand in private equity is that IRRs are numbers used in marketing and not representative of investor retuns In the below example, a 20% "IRR" is actually equal to an 11.9% annualized return (and...
Bill Dudley’s Market Mix‑up Highlights Investor Confusion
If Bill Dudley still confuses First Brands and Tricolor with private credit, literally six months after all market participants realized they were in the broadly syndicated loan and asset backed finance markets, then what hope do regular people have? https://t.co/aA33Nc1928
Canada’s Housing Market Plummets 20%, Quietly Absorbed by Stable Finance
Canadian residential real estate is down -20% from its peak in 2022, a crash in prices worse than the U.S. in 2008. But no one is talking about it, primarily because the financial system is well-functioning (so far), as creditors do...
LENSAR Ends Alcon Merger Amid FTC Opposition
Kudos sir - this was a good tweet LENSAR Announces Termination of Merger Agreement with Alcon Research "We understand that the Federal Trade Commission intends to seek to enjoin the acquisition" $LSNR $ALC
Private Equity’s Marketing Masks True Volatility and Returns
One of the main reasons behind the significant backlash against private equity and private credit is some of the ways they were marketed are misleading: - Volatility laundering: Private equity claiming vol of 8% when it's actually 25%+. Private credit claiming...
MFIC Chooses Discounted Share Buybacks Over New Loans
Apollo's listed BDC, $MFIC, trades at a -27.2% discount to NAV with non-accruals of 2.6%, PIK of 4.8%, and software exposure of 11.4% While it doesn't stand out via its market average NAV discount, it does stand out on capital allocation....
Abra's $846M Acquisition Highlights Digital Asset Wealth Management
Abra / New Providence Acquisition III deal overview Digital asset wealth management platform $846.3 million enterprise value Symbol $ABRX PR: https://t.co/PKIWSdVOsf IR deck: https://t.co/4K0equHQqD Disclosure: Long $NPAC shares + warrants in $ARB.to https://t.co/2X7jjFOvzd
PE Firms Eye Anthropic AI to Boost Portfolio Innovation
The market is counting out private equity-owned (and private credit-financed) companies, even though they could be the firms that pursue AI most aggressively. A consortium of PE firms are in talks to integrate Anthropic's AI into their portfolio companies. https://t.co/ajG448PXen
Cliffwater Drama Yields Just $0.7B Net Inflow
While the headlines around Cliffwater have been apocalyptic, here's how fund flows are looking for Q1: - redemptions received: $4.5 billion - amount repurchased in tender: $2.3 billion - expected new commitments: $3.0 billion All of this drama for $0.7 billion of net...
Liquidity for Forced Direct‑Loan Sellers Set to Outperform
Good take below. I agree that a strategy providing liquidity to forced sellers of direct loans, due to elevated outflows, will be one of the best performing investment strategies over the next 3 years.
Merger Arbitrage Yields Still Low, No Arbageddon Yet
While we're seeing panic in certain areas of the market (private credit), it has not translated to merger arbitrage, where the current average yield of 10.8% is far below a March 2020-type environment. Once we see arbitrage yields nearing 20%, then...
Critical EDGAR
The world's most important website is in shambles. What the heck is going on with EDGAR? https://t.co/pKsJXrmAal
SPACs Need Mergers, Not Just IPOs
My thoughts on the SPAC market today: “Not having mergers is certainly a negative because that’s what ultimately drives the entire sector. There’s no point in having a bunch of IPOs if you’re not going to see any material deal...
Testing if Best SPAC 2 Beats Its Predecessor
Excited to see whether Best SPAC 2 truly is better than Best SPAC 1 https://t.co/UZsTF1gaFs
Sponsor-Backed SaaS Leads Agent
Narrative violation: Sponsor-backed SaaS companies are becoming the leaders in agentic AI. Seems unlikely that the Zendesk 1L loan is worth $0. https://t.co/WTPW4ywh8V
HLEND’s Tiny AUM Impact Doesn’t Justify BlackRock Dip
The negative spin from the media and doomers on HLEND affecting $BLK stock price is actually really stupid for a couple of reasons: "Hlend didn’t need to draw down on any liquidity to pay for the 5% redemption. It had more...
Pershing Square Launches $5B Closed‑end IPO, Offers Management Shares
Pershing Square has filed for a $5 billion IPO of a closed-end fund, Pershing Square USA $PSUS. Additionally, Pershing Square Inc. will go public under the symbol $PS. Buyers of the closed-end fund IPO will also receive shares in the management company. Interesting...
Questioning Zero‑Marking of Jiffy Lube Private Credit Loans
"Golub Capital will act as sole administrative agent and joint lead arranger on the financing. Ares Credit funds and MidCap Financial will also act as joint lead arrangers on the financing." Should we be marking the private credit loans to Jiffy...
