Episode summary
Where the Risk Hides: Tom Majewski of Eagle Point on CLOs, Private Credit, and the Next Credit Cycle
Dakota Live!
· · 1 hr · Hosts: Robert Morier · Guests: Tom Majewski
Summary
Tom Majewski argues that Eagle Point’s edge comes from treating credit as a business of structure, alignment, and patience rather than just spread-picking. He traces his path from accounting and securitization into banking and then into founding Eagle Point with Stone Point Capital, emphasizing that he wanted a model where the manager could own the economics and make decisions without bureaucracy. He also says the firm’s culture is built around hiring people who can handle both complex investing and the messy realities of building a business.
A large part of the conversation explains what CLO equity is and why he thinks allocators often misunderstand it. Majewski describes a CLO as a better-built bank: a levered vehicle funded with long-dated, non-mark-to-market liabilities and backed by senior secured floating-rate loans. In his view, the key point is that CLOs can absorb mark-to-market volatility without forced liquidation, unlike bank-like structures that can fail when financing runs.
He also discusses Eagle Point’s newer strategies, especially portfolio debt securities and middle-market infrastructure lending, where the firm uses stable financing to lend to private credit funds and projects that need flexible capital. Looking ahead, he expects the next credit cycle to be a slow-moving flush rather than a 2008-style shock, and he thinks AI will help with diligence and monitoring more than with making origination decisions.
Key takeaways
- Tom Majewski says Eagle Point’s advantage is combining a private equity mindset with credit investing, with character of management as important as collateral.
- Majewski argues CLO equity is buying residual cash flows from a better-built bank, with 12-year non-mark-to-market financing and senior secured floating-rate loans beneath it.
- He says portfolio debt securities grew from a niche trade into a strategy now over $6 billion, financed by lending to private credit funds on 40 Act-style terms.
- Majewski expects the next credit cycle to be measured in years, not months, and says middle-market lending is where hidden stress is most likely to surface.
- He thinks AI will be useful for diligence and monitoring, but not as a replacement for human judgment in bespoke private-market transactions.
Notable quotes
“we think a little more broadly across the markets. We compare across markets and across all of the things we do, we bring a private equity mindset into a credit investing world”
“At the end of the day, you're you're buying a stream of residual cash flows. A CLO is probably best thought of as a better bank”
“there's never been a run on a CLLO. We could we need longer than an hour to cover all the runs on banks that have happened”
“If it's 11 and a quarter versus 11 and 38, does it really matter”
How the episode opens
Welcome to the Dakota Live podcast. I'm your host, Robert Morier. The goal of this podcast is to help you better understand the people behind investment decisions.
We introduce you to chief investment officers, manager research professionals, and other industry leaders to help you sell in between the lines and better understand the investment sales ecosystem. If you're not familiar with Dakota and our Dakota live content, please visit our website at dakakota.com. Before we get started, I need to read a brief disclosure.
This content is provided forformational purposes and should not be relied upon as recommendations or advice about investing in securities. All investments involve risk and may lose money. Dakota does not guarantee the accuracy of any of the information provided by the speaker who is not affiliated with Dakota.
Not a solicitation, testimonial, or an endorsement by Dakota or its affiliates. Nothing herein is intended to indicate approval, support, or recommendation of the investment adviser or its supervised persons by Dakota. Today's episode is brought to you by Dakota Marketplace.
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Well, if things look a little different today, it is because it is different. We are in New York City today. We are at Prox's offices.
I want to thank Ben Howard and the team here at Pro for hosting us in their New York City offices.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- clo equity
- private credit valuations
- credit cycle risk
- ai in credit investing
- loan prepayment risk
Companies and tickers mentioned
- EQT
- Eagle Point Credit Management
- Stone Point Capital
- Merrill Lynch
- Taproot Capital
- Rosemont
- EQT Infrastructure
- Prosek Partners
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Dakota Live!, this episode and its artwork belong to Robert Morier. Octagon is not affiliated with the show; this page is an independent summary.
