Ryan Fleischer

@CreightonJays7 How many fake degrees did Creighton hand out?

Creighton- 21 tournament wins Nebraska- 1 Levels to this, still such a sorry program

@jetski_cowboy @KurtSupeCPA What’s your return %? What is the need?

@RevGroupLLC @KurtSupeCPA 1. You're assuming I suggested that be their withdrawal rate. I didn't 2. You're assuming I suggested they gift her $40k/y in perpetuity. I didn't Giving a one-time or short-term recurring gift to their daughter is very unlikely to blow up their retirement plans

Couple comes in for their annual review. $2.8 million. Well invested. Solid Pension. Completely on track. I ask the question I ask everyone. "How is your daughter doing?" Mom's face changed first. Their daughter is 39. Hasn't asked for anything. Never complained. But she's been in the same apartment for six years. Daycare alone is $1,800 a month. Down payment feels impossible. Dad said "we always figured she'd get it eventually." I pulled up a simple chart. Statistically they live to 88. She inherits at 56. Maybe 60. At 60 her own retirement is eight years away. The money that could change everything at 39 arrives when her finish line is already close. Neither of them had ever seen it framed that way. The annual gift exclusion is $19,000 per parent per child. They can move $38,000 a year to her. No gift tax. No estate implications. Over ten years that's $380,000 transferred while they're healthy enough to watch it matter. Dad looked at his wife. "Why are we waiting?" Most families leave everything at death because nobody showed them the math of giving it while they're alive.

@bwdavalos @junkbondinvest I think the evergreen structure is fine. It’s the peope that incorrectly sell it or incorrectly buy it, mostly. I like funds that draw in sensibly. When exit there is capital que to fill the exit demand.

@RevGroupLLC @junkbondinvest These funds need to go back to drawdown funds with 7-10 yr lockups. You can always raise another fund perpetual funds were for the benefit of gathering AUM and billing on it

S&P to Cliffwater: if you keep honoring redemptions above 5%, we might downgrade you. So the choice is: gate your investors and keep your rating, or pay your investors and lose it. The product design is now working against itself.

@junkbondinvest Not accurate. Doom gloom. This is not direct lending.

Look at the left chart. Private credit bankruptcy recoveries. 6 out of 13 issuers recovered 25 cents or less. Almost nothing in the middle. You either get out near whole or you get almost nothing. That's Apollo's Zito "20 to 40 cents" call showing up in actual data.

@Ilikebigbucks87 @KurtSupeCPA Didn't factor in inflation, longevity risk, nor taxes. Also will have IRMMA for Medicare. So many things short sighted with this logic. Pension, flat and no COLA. Stamps, gas and food always go higher in time.

@RevGroupLLC @KurtSupeCPA They have no need, that's the point. But I'll bite, parents are 70 so probably paid off house. They could take the 2.8 and put it into a 20yr and get 136k yearly plus the pension. So yeah they're fine.

@jetski_cowboy @KurtSupeCPA Assume. So what is it? You never assume. You indicated a 5% withdraw rate. I have seen many times people's portfolio blow up at this rate. No growth and underwater. You never assume anything.

@RevGroupLLC @KurtSupeCPA Sequence of returns risk is typically factored in when you're calculating your own SWR Given that this hypothetical couple is meeting with a Retirement Planner, I'd assume they already know what their need is

Clearly undereducated on the subject. The good ole PIK line. Totally number to roll into PIK so no delusion, especially in software. Some these also convert and contain warrants. You said they don't know how to underwrite a loan based on cash flow securitized by plant, property, and equipment. Just insane thinking with 40% last loss as well.

It’s lent to borrowers with no financial capacity remaining to repay the loans. High interest rates for long will do those heavily leveraged borrowers in - it does every time. Always has. Difference is PC has used PIK extensively but even that lifeline is running out. Continuing to capitalize unpaid interest on loans, while also continuing to declare these loans as accruing…cannot continue forever. Their financial performance is built on lies. Overstated income, understated credit losses. PC has been delaying the inevitable for years, hiding actual performance behind fundraising slights of hand and fake credit marks on the paper it’s been selling to its related entities. Now that redemptions are knocking they are running out of time and options.

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."

@ClayTravis Don't kid yourself. We are still living in misery due to football. Five short months it will be living hell sold on snake oil.

Congrats to long suffering Nebraska basketball fans on their first ever NCAA tourney win.

@jetski_cowboy @KurtSupeCPA What is their need? What if it was $120K? Also, you didn't factor in sequence risk, nor income sequence risk, and inflation. Getting a 10% return and giving yourself 5% doesn't work this way. I can show you numerous times where you go broke.

@RevGroupLLC @KurtSupeCPA They have $2.8m. If they see just a 5% return each year, their investments grow by $140,000/year They could give their daughter $40k, keep $100k for themselves, and not even touch the principal, let alone the pension in this fake story These boomers aren't running out of money

@SignifyingMonky @ChonkyBitcoiner @KurtSupeCPA You are not looking a sequence risk and inflation, nor taxes.

@RevGroupLLC @ChonkyBitcoiner @KurtSupeCPA At 5% 2.8M generates $140,000 a year. They can afford it will still stashing away

@RobertC43556505 @JulianKlymochko Manipulated how? It’s orginated on terms.

@RevGroupLLC @JulianKlymochko Private credit financial performance is entirely manipulated bud. Top performing means absolutely nothing in that context. Nothing at all. And it will mean even less when the bleeding starts.

Most private deals are bad deals. In real estate it could be number of factors. The asset itself, the terms, or operator. Often times it is combination of all three. All said if you have access the private markets give responsible investors the ability to reduce risk, create tax efficiency, and substantially outperform.

Saw a pitch deck for a multifamily deal in Dallas with 3% rent growth and 4.85% exit cap rate assumptions We are so back

@TechNeurotic @KurtSupeCPA Yes sure. Gradually and then suddenly.

@RevGroupLLC @KurtSupeCPA With that much in raw assets they can estate plan to give their daughter the boost she needs while also guaranteeing they won't go broke

@Ilikebigbucks87 @KurtSupeCPA You know their need? What is it?

@RevGroupLLC @KurtSupeCPA Mom and dad have 2.8 million and a pension, they'll be fine

Indeed. It’s the great wealth effect. People are feeling wealth slide than they are. $2.8m used to be a lot of money. Today that is eroding away by the day. It is all about their need first. If that is their priority they better know the consequences in the future, just like all decisions. But the troubling part, even if mom and dad help daughter and their portfolio becomes unhealthy, the advisor that made the recommendation will never tell them.

@RevGroupLLC @KurtSupeCPA it's not that much for 2 people and their medical, possible care home. They could end up moving in with the daughter.

@AstarothMax @KurtSupeCPA So you magically know their need? Just wait until mom and dad’s portfolio becomes the make wish fund for daughter. I have seen this play out dozens of times.

@RevGroupLLC @KurtSupeCPA You’re dead wrong. The parents have a pension, likely Social Security, and a $2.8 mil portfolio. If their pension is $2k/month and SS is $2.5k/month, they can live off of $128k/year while giving the $38k to their daughter and staying within the 4% rule on their portfolio.

Their clients. The average client returned 3.7% annualized over the last 25 years. You are right about clients asking just like sheep being led. Banks are transactional and if they find a way to make money they will. Remember they are not fiduciaries, they are transactionalist.

When Goldman and JPMorgan start building products for hedge funds to short an entire asset class, they're not doing it for fun. They're doing it because their clients are asking for it. And their clients are asking because they see what's coming. Private credit exploded over the last five years as the "safe" alternative to public markets. Now redemptions are accelerating, lenders are overexposed to software companies getting gutted by AI layoffs, and the two biggest banks on Wall Street just made it easy to bet against the whole space. We've been saying all week to watch credit markets for the real signal. Copper rolling over. Gold selling off. Forced liquidations. This is what the early innings of credit stress look like. Not a blowup. Just the quiet construction of instruments designed to profit from one. The last time Wall Street started packaging ways to short a credit market everyone thought was safe, it was 2006. The product was called a credit default swap. The asset class was mortgage-backed securities. It didn't end well.

This, from Bloomberg, is not good news for a market segment that is already challenged to separate signal from noise, let alone properly differentiate among funds/firms in this space. #markets #privatecredit

@elerianm 🤣 just as the issuers insiders are buying back their stocks. This is the problem with the banks. They profit on transactional fear mongering. We’ll see who is left holding the bag, but my money is with the issuers.

These are consumer loans. People been screaming fire in crowded room here for last 4 years, at least. The consumer is squeezed. Unlike direct lending of corporates that are asset backed every top tier lender I spoke to this week reitered same thing. -there will always be defaults by headlines are nauseating -seeing significant opportunities, this is not systemic -increasing rate coverage -increasing risk coverage

…when “in isolation” is no longer.