Private Credit Cracks, The AI "Boogeyman" & Why Crypto is for Boomers | The Real Eisman Playbook

TL;DR

Private credit fears are overblown, AI disruption panic is premature, and crypto lost its cool to prediction markets.

Key Points

• 1.Blue Owl's OBDC2 crisis: Blue Owl tried to merge a troubled $1.7B public BDC into a larger private fund at a 20% discount, then canceled. Later sold 35% of assets at par (99.7 cents) to OMERS, Calpers, and others, returning 30% of capital to investors — but markets assumed they sold only the good assets, cratering the stock 30-50%.
• 2.Private credit reality check: Direct lending is ~20% overindexed to PE-backed software companies, but loans carry ~35% LTV equity cushions. If lenders lose 10 cents, the private equity sponsor loses everything first. Stocks are pricing private markets as if they're dead forever — Glenn says that's flat wrong.
• 3.Private credit ≠ all private credit: Direct lending is just one slice. Real estate credit, infrastructure debt, and asset-backed finance are largely investment grade, backed by real assets, and are in much better shape.
• 4.SoFi red flag: SoFi's 2025-1 securitization just triggered its cumulative net loss (CNL) trigger at 2.6% — the first time SoFi has ever hit this threshold, forcing paydown to protect senior tranche investors.
• 5.AI boogeyman: Insurance broker stocks (AON, Marsh) fell 10-12% in one day after OpenAI approved a Spanish AI insurance app. Schwab, LPL, and Raymond James also got hit by AI headlines — Glenn and Dwight agree the disruption risk to commercial insurance brokers and retail brokers is vastly overstated.
• 6.iPhone disruption analogy: Dwight warned that like the iPhone disrupting Blackberry, Garmin, Kodak, and taxis, AI's true disruption won't be clear until years later — making it genuinely hard to dismiss, even if today's panic is overdone.
• 7.Crypto is for boomers: Crypto is trading horribly. Thesis: the young, speculative crowd has migrated to prediction markets (betting on Trump's next move). The Clarity Act stalled because banks are lobbying hard against stablecoins paying interest, fearing deposit competition. Robinhood is diversified and still growing ~26% net new assets; Coinbase is more exposed.
• 8.Bank M&A disappointment: Despite a permissive regulatory environment, bank M&A has been slow. The core problem: every CEO wants to be the buyer, not the seller. JPMorgan has $40B+ in excess capital and Jamie Dimon explicitly flagged payments and asset/wealth management as M&A targets — could buy a payments company but technology integration risk is a major hurdle.
• 9.The disconnect that can't last: High-yield spreads (HYG) are tighter than ever, bank CEOs say credit is fine, capital markets are booming — yet private market stocks are obliterated and SoFi is triggering loss thresholds. Glenn argues this is an unsustainable divergence; something has to give.