Yesterday’s sharp sell-off in Blue Owl and several other BDC-related names caught a lot of people off guard. The catalyst was simple:
Blue Owl announced that they sold a portion of their loans slightly below par.
That single disclosure triggered a wave of fear — not just in their stock, but across the entire sector. Headlines focused on “discounted loan sales,” and investors reacted as if this were a sign of systemic weakness.
But after thinking about it for nearly a full day, I’ve come to a different conclusion — one rooted in a basic truth that too many people forget:
Every Sale Has Two Sides
When something is sold below par, the instinct is to assume distress. But that’s only one possible explanation. In markets — whether we’re talking about stocks, bonds, loans, or even merchandise — professionals make decisions based on expectations. That’s the real root of this thesis.
My Own Recent Trades Prove the Point
Over the past few months, I’ve been buying U.S. Treasuries — both 20‑year and 30‑year — below par. Some of these purchases were around 97% of face value.
Now, why would someone sell me long‑dated Treasuries at a discount?
Most people jump to the obvious answer:
“They needed capital.”
Sure, that’s possible. Liquidity needs, debt payments, or dividend obligations can force sales.
But experienced investors know there’s another layer:
strategy.
The seller may have believed interest rates were going to rise. They may have wanted to rotate into shorter duration. They may have been repositioning ahead of a macro shift. Or they may have simply preferred to lock in gains elsewhere.
Meanwhile, my strategic view is the opposite. With COVID behind us, debt levels rising, and the Fed eventually needing to ease, I see a path where long‑term rates drift lower. If that happens, the value of the Treasuries I bought at a discount will rise.
Same sale.
Two sides.
Two different expectations.
Applying That Lens to Blue Owl
Blue Owl sold loans slightly below par. That’s the fact.
But the interpretation is where investors split.
The market assumed:
“Discounted sale = trouble.”
But what if the sale was strategic?
- What if Blue Owl expects a better loan environment ahead?
- What if they wanted to clean up older positions to make room for higher‑quality originations?
- What if they see a shift in the technology sector — where these loans were concentrated — and want to reposition before AI‑driven volatility reshapes valuations?
Remember:
A sale below par does not automatically mean distress.
It can just as easily mean opportunity, rotation, or forward‑looking strategy.
And yes — the fact that these loans were in the technology sector added fuel to the fire. AI is reshaping industries, scaring some investors, and creating uncertainty. Markets hate uncertainty.
But uncertainty does not equal weakness.
My Position on BDCs Right Now
I’m not trimming my BDC holdings. I still believe tariffs are necessary to restore balance to American industry. For decades, off‑balance trade conditions pushed companies overseas — Apple’s move to China before the iPhone era is still one of the clearest examples.
Tariffs help level the playing field. A stronger domestic manufacturing base supports stronger domestic lending. And BDCs thrive when American businesses thrive.
That said, I’ve placed my BDC investments on a 30‑day hold. Not because I’m bearish — but because I want to see what new information surfaces. Strategic moves often reveal their purpose with time.
If Blue Owl believes the loan environment is improving, this sale could actually be a positive signal, not a negative one.
Final Thought
Markets often react emotionally to headlines. But investing requires stepping back and remembering the simple truth:
Every sale has two sides and the seller’s reason is not always the one the market assumes.
I also believe the market tests our intelligence and discipline constantly. It’s a strategic ecosystem, not a scoreboard. When one participant gains, another often gives something up... and those dynamics force us to think beyond the surface.
These are my thoughts. Avoiding emotional, reaction‑driven decisions is very important. The hardest part of investing isn’t the math… it’s resisting the instinct to respond quickly, rather than thoughtfully. When we stay grounded, patient, and analytical, we give ourselves the best chance to understand what’s really happening beneath the headlines.
Disclosure
This post reflects my personal opinions and interpretations. It is for informational and educational purposes only and is not investment advice. Always conduct your own research or consult a qualified financial professional before making investment decisions.
