AC Neville

"The same banks that helped build the private credit boom are now building the tools to bet against it". lol nice

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 versus similar private counterparts is an arbitrage that will resolve over time. Capital will be reallocated, and the public BDC sector should benefit as the liquidity-taking abates and discounts normalize." "The weighted average price-to-book (“P/B”) ratio of these sixteen public BDCs is 0.83x, while equity in their non-traded BDCs can be redeemed at 1.00x P/B." "The rebalancing of the ecosystem will take time to fully materialize, but it should ultimately result in the widening of new origination spreads and a healthy recalibration of the supply-demand dynamic for private capital." "As we witnessed during the redemption cycle that impacted non-traded REITs in 2022, flows are typically correlated in the sense that in periods of significant redemptions, inflows tend to decline significantly. That is what we are now seeing in the non-traded BDC market." "We believe it is worth reminding ourselves that the current dislocation across the BDC sector is taking place in the context of a relatively constructive economic backdrop. Consumer balance sheets remain healthy, corporate earnings growth has been solid, and unemployment is still near historic lows despite the most recent jobs report. The economy broadly speaking is in decent shape." "We believe the current AI fear in the market is largely an equity valuation problem. While equity owners may be the first to absorb downward pressure as multiples re-rate, TSLX remains positioned at the top of the capital structure... Despite our enthusiasm, we see excess hype (and inversely, excess fear) in the market discourse. Both sides of this coin lack nuance, brushing very different businesses with a broad stroke and conflating credit risk with equity valuation problems."

Financial Times: “Private Credit funds are mostly unlevered…” Clip and save.

If Range Rovers are so unreliable, why do people still buy them?

Hurley made the NCCAs 3x in his 11 years, but it would have been 4x if not for COVID. That's far better than his predecessors

JP Morgan said it will likely (my interpretation) be demanding more collateral for their loans to Private Credit. That means JP Morgan believes the collateral values are down from the loan origination date.

On this day in 1991, the band Mookie Blaylock go on the Seattle radio station KISW and announce they are changing their name to Pearl Jam. They would soon release their debut album, 'Ten.'

Franco-Nevada earnings were out last night. Revenues were up 86%. Earnings per share crushed estimates, coming in at $1.85 (estimate was $1.68). Operating profit margin: 90.9%. The company raised its dividend by 16% – the 19th such increase in a row. I’ve long believed Franco-Nevada (FNV) is one of the few, genuine secrets of the financial markets. It has been in all of my recommended portfolios for almost 20 years. Why? It’s the surest bet in the world: it's the best way to profit from the decline of the U.S. dollar. It owns royalties on hundreds of gold mines all around the world. It buys these royalties with “new dollars” on the Cantillon clock and then reaps the rewards of much higher gold prices, as its royalties are paid in gold, not in dollars. Since its 2007 IPO, the stock has drastically outperformed gold itself and every mining index. Simple plan to protect yourself from the madness of our government? Buy $1,000 worth of Franco Nevada every month. If you’d done this since its IPO, you’d own $2 million worth of stock today and the dividends would now more than cover your monthly contribution to the plans: you’d be getting dividends worth about $1,200 per month. If you're tired of watching the government's paper money destroy your purchasing power, your quality of life, and your savings, Franco-Nevada is the answer.