Blue Owl's Private Credit Fund Merger: Investors Take a 20% Hit and What We Know
Blue Owl's Nightmare Merger: Another Wall Street Bait-and-Switch?
So, Blue Owl's in the hot seat, huh? Surprise, surprise. Seems like every other week there's another "securities fraud investigation" being tossed around like a hot potato. This time, it's Blue Owl Capital (NYSE: OWL), and the smell is getting pretty ripe.
The Trapdoor Opens
The Financial Times dropped a bomb, and now everyone's scrambling. Apparently, Blue Owl’s locking investors out of their private credit fund, Blue Owl Capital Corporation II, while they force this merger with the bigger Blue Owl Capital Corporation. The kicker? Investors are gonna get screwed. Trading their shares for publicly traded Blue Owl shares that are, get this, 20% below the fund's net asset value. Blue Owl private credit fund merger leaves some investors facing 20% hit
Twenty percent! That’s not a haircut; that’s a freakin' scalping.
And offcourse, the stock price takes a nosedive. Down almost 6% in a day. You almost feel bad for the shareholders...almost.
Here's the part that really gets me: they're calling it a "merger." Let's be real—it's a bailout disguised as a merger. They're using the bigger fund to absorb the smaller one's problems, and the little guy is left holding the bag. Is anyone actually shocked?
The Usual Suspects
Glancy Prongay & Murray LLP and The Law Offices of Frank R. Cruz are already circling like vultures, announcing investigations and urging investors to come forward. You know the drill. They'll file a class-action lawsuit, drag this out for years, and then take a big chunk of whatever settlement they manage to squeeze out. It's the circle of life on Wall Street.
But hey, at least somebody is getting paid.
And Rida Morwa over at Seeking Alpha was still telling people to "Buy Blue Owl Capital Like It's 2020" on the very same day the FT article dropped. Talk about tone-deaf. Credit fears, First Brands, Tricolor bankruptcies...and this guy's pumping Blue Owl? Maybe he knows something we don't, or maybe he's just trying to catch a falling knife. I just don't know anymore.
The Big Question: Is Anyone Safe?
This whole Blue Owl mess raises a bigger question: can you ever trust these private credit funds? They promise high yields and low volatility, but what happens when the music stops? Are they just Ponzi schemes in fancy suits?
I mean, look at the language they use: "Net Asset Value," "redemptions," "merger." It's all designed to sound legitimate and sophisticated, but underneath it's the same old game. Take money from Peter to pay Paul, and when Peter runs out of money, blame the market.
Then again, maybe I'm being too cynical. Maybe Blue Owl is just a victim of circumstance, and this merger is the best way to protect investors in the long run. Nah, who am I kidding?