Episode summary
Re-Run: Boaz Weinstein | Money Stuff: The Podcast
Money Stuff The Podcast
· · 50 min · Hosts: Matt Levine, Katie Greifeld · Guests: Boaz Weinstein
Summary
Boaz Weinstein argues that Saba’s tenders for private BDCs and interval funds are a way to exploit a real liquidity mismatch, not just a publicity stunt. He says products like OBDC II and Starwood SREIT promise investors a path to periodic redemptions, but in stress they can take years to unwind, so selling at a discount can still be rational when investors need cash or fear further markdowns. He also frames the trade as partly reflexive: falling NAVs can trigger more outflows, which force selling and push NAVs lower still.
Weinstein says the private credit complex has been helped for years by “volatility laundering,” where monthly marks and steady distributions hid risk, but higher rates, distribution cuts, and rising redemption requests are exposing the gap between underlying asset liquidity and fund liquidity. He argues that managers are protecting fees and brand value by gating or limiting redemptions, even when they could potentially buy back shares at a discount.
He is bearish on the sector broadly, but says the tenders can still make sense because the funds are levered, fees will eat into returns, and some marks may still be too high. He expects the situation to keep evolving as redemptions, defaults, and mark adjustments continue to hit private credit products.
Key takeaways
- Weinstein says Saba’s tenders are designed to capture liquidity pressure in private BDCs and interval funds, not just to make a statement.
- He argues that 5% quarterly redemption mechanics can fail badly in a sell-off, creating a reflexive cycle of outflows and forced selling.
- Weinstein says private credit marks are still too high in many funds, and some managers are protecting fees by avoiding buybacks at discounts.
- He thinks public BDC discounts make it hard to justify private BDCs trading much closer to NAV.
- He says the long-term opportunity may improve if the private credit market weakens further and redemption pressure rises.
- Weinstein warns that volatility was “laundered” for years, but distribution cuts and rising defaults are now exposing the risk.
Notable quotes
“The reflexivity of falling navs leading to larger outflows leading to force selling leading to falling navs and then you're out in three or four years”
“I really think this could be a systemic nightmare”
“I think it's safe to say that we don't think that there's a lot of manager alpha these days in that space”
How the episode opens
Bloomberg Audio Studios podcasts radio news.
Hi, we're rerunning our interview with Boaz Weinstein, which was recorded in March. This is about his tender offer for some Blue Ale BDC's. Since then, the tender offer has expired.
He didn't get a lot of takeup, but he and others are still out there trying to buy BDCs at a discount, so a lot of the lessons are still relevant. Enjoy the show. Hello and welcome to the Money Stuff Podcast.
I'm Matt Lavine. I'm here with Katie Greold and our guest is Baz Weinstein of Saba Capital Management. I feel like we've thought since the beginning of this podcast about having you on to talk about closed down fund activism, but man, closed down fund activism has in a new form gotten really hot.
I want to talk about like what your trade is. you're out with a tender to buy what five 10% of OBDC2 5% of OBDC2 the uh the blue owl private BDC at a 35ish% discount to marked NAV. So like what's the trade here?
Like are you like going in the book and like doing detailed credit work and being like we think this stuff is worth 75 cents on the dollar so we'll pay 65. Are you hedging the credit? Are you trolling?
Are you What's the sort of basic trade here?
Why, Matt, do you assume it's not all the above? — It's just a lot. — I'm gonna start I'm going to start with trolling. The reason to assume it's trolling and not all of the above is because I think I think you mentioned before we started people's first natural question is, do you think you'll get any?
Okay. So, I've read some people uh suggest, oh, this is some sort of uh PR blitz like like I to get myself in in the story.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- semi-liquid fund liquidity
- reflexivity
- private credit navs
- public vs private bdc discounts
- permanent capital
Companies and tickers mentioned
- Saba Capital Management
- ODBC II
- SREIT
Watch the episode
Watch “Re-Run: Boaz Weinstein | Money Stuff: The Podcast” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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