In early March, Blue Owl's bosses gathered the staff and promised the firm would come out of the storm stronger. Seven months later the stock sits about 67% below its January 2025 high, and it recently dipped near all-time lows. Many senior staff get about half their pay in that stock. The Journal's Matt Wirz got a recording of the meeting. It hasn't aged well.
We wrote about Blue Owl on Oct. 3. Here is what is new. The firm disclosed this month that clients asked to withdraw 17% of their money from its largest private-credit fund last quarter. That is more than most competitors saw. The smaller fund it tried to restructure last year posted its worst loss since the height of Covid. Fundraising from individuals dropped about 60% in the second quarter from a year earlier. Fundraising from institutions fell 22%. Investment bankers have been meeting the founders about a full or partial sale. Co-founder Doug Ostrover responded to the Journal. "The real test of a business is how it performs under pressure," he said.
How the exit door actually worked
Last fall, crowds of individual investors asked to pull money from private-credit funds, Blue Owl's among them. The restructured fund could not just write checks. In February the firm said it would sell $600 million of loans to hand clients about 30% of their money back. One of the four buyers was a related insurance company. By August, another 13% had come back as more loans were sold or repaid. Each sale and payoff left a bigger share of problem loans behind. In August the firm said about 10% of the loans still in the fund were in default and 20% were underperforming. It says its larger, newer funds have lower default rates than average.
There is one more thing inside the firm. The founders have placed a huge wager on financing and building AI data centers. Analysts told the Journal that strong fundraising there could offset the credit troubles, though a backlash against AI is a risk. That bet belongs to the firm. Whether any of it sits in a given fund is something only that fund's holdings list can tell you. Individuals were the growth engine. The firm raised about $50 billion from them from 2022 to 2025. In a 2020 presentation, Ostrover called that retail business "our hidden gem."
Our read
This is an Investments/Risk IN04 story with a Fixed Income IN02 twist. We don't own Blue Owl, and this isn't about the owl. It's about the door. A fund that lets you out quarterly lets you out when few others want out. When everyone heads for the exit at once, you get a slice, then another slice months later, and the loans left behind get worse. That is the trade you make for the extra yield, and it's easy to miss in the brochure. As a general principle, we'd avoid private-credit funds sold to individuals. That's a view on the product category, not advice about any one fund.
Here's the connection to your own money. Maybe a private-credit or "interval" fund, one that lets you out only at set times, has been offered to you. Maybe one already sits in your IRA. Either way, find the redemption section of the prospectus this week. Note the quarterly limit, who can pause it, and what happens to the loans that stay behind. Then check whether the fund's newest loans finance data centers. You find the fire exit before the show starts, when the lights are still on. If the terms are hard to follow, bring the prospectus to a review and we'll read it with you.