trades around $10.20–$10.30, close to its 52-week low of $10.08 and far below the $22.25 high, implying a drawdown of more than 50%. At this level, the stock carries an indicated dividend yield of roughly 8.7–9.0%, while the headline free-cash-flow yield is only about 7% and falls toward 3% once you adjust for heavy stock-based compensation. The market is clearly demanding a high yield to hold OWL through a potential private-credit down-cycle, not paying up for a “compounder”.
Blue Owl controls about $307B of assets under management, with approximately $157–158B in credit strategies and around $115B in direct lending alone. In practice, roughly half of the firm is now private credit, with the rest in real assets and GP-stakes-type strategies. The growth engine has been evergreen, semi-liquid vehicles – BDCs, non-traded funds and perpetual REITs – that generate stable management fees and appear to be “permanent capital” until redemptions start testing liquidity. This concentration means that any structural stress in private credit translates almost one-for-one into OWL’s growth, fee base and multiple.
A key differentiator for Blue Owl has been its aggressive push into AI infrastructure and digital real estate. Funds managed by Blue Owl own 80% of the Hyperion data-center JV with , which is designed to deliver 2GW of capacity with an option to scale toward 5GW in Louisiana, with Meta as sole tenant via long-term leases. The SPV that owns Hyperion has issued roughly $27.3B of senior secured debt, rated A+ and largely justified by Meta’s AA- credit rating, plus a residual value guarantee of about $28B that steps down over time. Meta carries only 20% of the equity and uses equity-method accounting, keeping the massive Hyperion debt off balance sheet. The transaction is complex enough that Meta’s auditor has flagged it as a critical audit matter, sending a clear message that AI-linked SPV structures are now squarely under regulatory and political scrutiny. For Blue Owl, the risk is not just the JV itself – it is the template. The firm has built a repeatable model of “iron-clad” 15–20-year leases with hyperscalers across its digital-infrastructure platform. If regulators or rating agencies begin to reassess the economics, assumptions or consolidation treatment of these structures, valuation and covenant assumptions embedded in Blue Owl’s underwriting can get repriced quickly.
Management emphasises that tech and software-linked portfolios are “pristine”, with loan-to-value ratios around 30% and portfolio companies delivering double-digit revenue and EBITDA growth. On paper, a 30% LTV means a 70% equity buffer before lenders take pain, which looks conservative. The problem is that LTV is only as solid as the valuation input, and AI-related infrastructure and high-growth software equity is exactly where the valuation dispersion risk is highest. In a scenario where AI capex returns are slower than promised or regulatory scrutiny forces more conservative accounting and discount rates, NAVs can reset materially, compressing that apparent equity cushion. This is particularly relevant as Blue Owl keeps tilting its AUM mix toward AI, data centres and software – the part of the market most exposed to re-rating if sentiment on AI economics or balance-sheet risk turns.
The first visible stress point has been Blue Owl’s tech-focused vehicles. The non-traded Blue Owl Technology Income Corp. (OTIC) recently saw withdrawals of about $527M, equal to roughly 15.4% of net assets, after the firm raised the redemption cap from 5% to 17%. That is not “normal rebalancing” – it is a clear sign that clients are trying to get cash out of tech credit exposure. At the same time, the publicly traded is heavily concentrated, with more than 80% of its portfolio in technology-related borrowers. Management positions this as a positive – mission-critical, recurring-revenue software, with mid-teens EBITDA growth – but in a tightening liquidity environment this also becomes exactly the segment where investors question forward visibility, ARR quality and eventual earnings leverage. The combination of stressed redemptions at OTIC and high tech concentration at OTF underlines that Blue Owl’s most celebrated growth vertical is also its most vulnerable risk cluster.
Blue Owl is increasing its allocation to PIK and ARR-based loans in OTF and the broader tech credit platform to boost portfolio yield. These instruments are typically extended to companies that are not yet EBITDA positive and are valued on annual recurring revenue, customer lifetime value and long-term growth narratives. The internal plan is that ARR loans convert into EBITDA-underwritten loans within two to three years once companies scale. In a world of cheap capital and frictionless AI adoption that could work. In the current environment, where compute costs, energy expenses and infrastructure capex are exploding, many AI and software companies are seeing cash burn persist much longer than originally modelled. If ARR credits fail to migrate into EBITDA-based structures on schedule, OWL ends up with a larger portion of the book in riskier, less cash-covered positions just as liquidity is evaporating and regulators are circling the AI financing ecosystem. The result is higher apparent yield today in exchange for materially fatter left-tail risk later.
The second major development has been a sharp rise in redemptions across multiple private-credit vehicles. OWL first halted withdrawals in one of its smaller funds in November 2025, and redemptions have remained “elevated” into Q1 2026 and likely Q2, according to management commentary. Instead of re-opening as conditions “normalized”, Blue Owl had to gate additional funds and sell roughly $1.4B of assets from three credit pools. For now, management highlights that loans were sold at about 99.7% of par, and a portion was absorbed by OWL’s own insurance affiliate Kuvare, which underscores the closed-loop nature of private credit funding. But the sequence is textbook: worry, then redemptions, then asset sales. If redemptions persist or accelerate, at some point the market clears at discounts to par, and NAVs and reported IRRs start to reflect real price discovery instead of modelled marks. With around 50% of AUM in credit and direct lending close to 40% of total AUM, OWL is structurally more exposed to this process than diversified alternatives managers.
Peers like ARES, KKR, APO, BX and TPG also felt the repricing in private markets, but they run broader platforms with larger allocations to traditional PE, secondaries, infrastructure and real estate relative to pure direct lending. Blue Owl has deliberately built itself as a high-beta vehicle on private credit growth, particularly in specialized verticals like tech, software and digital infrastructure. That worked extremely well when rates were low, fundraising was effortless and AI capex stories were priced for perfection. In the current phase – higher for longer yields, regulatory noise, redemptions at semi-liquid vehicles, and first credit accidents in private names – that same concentration amplifies the downside. Even if actual credit losses end up modest, fee growth, multiple expansion and fundraising velocity can all stall at once.
On reported numbers, OWL produced around $1.26B of operating cash flow in 2025 and $1.20B of free cash flow after about $58M capex, which translates into roughly a 7% FCF yield at a $16.8B equity value. However, stock-based compensation was about $673M, more than half of operating cash flow. If you treat that as a real economic cost – which it is, because it dilutes you over time – “true” free cash flow looks closer to $525M, or about a 3.1% yield at the current market cap. Against that, OWL is paying an 8.7–9.0% dividend yield, which means part of your cash return is effectively being recycled back out via share issuance over time. That does not automatically make the dividend unsustainable today, but it means the equity story at $10 is not a deep-value 12–15% cash-on-cash bargain; it is a leveraged play on the private-credit cycle with a thin real-cash cushion.
On the positive side, OWL’s corporate balance sheet is not the immediate problem. Total debt of about $3.4B represents roughly 17% of enterprise value, with no large maturities before 2031 and approximately $1.8B of available liquidity (cash plus undrawn facilities). A small $60M maturity in 2028 is easily covered by internal cash generation. That profile gives the firm time and flexibility; it does not, however, immunize the business model from:
– A prolonged period of elevated redemptions in semi-liquid vehicles
– Fee pressure if fundraising slows materially
– Multiple compression if the market re-rates “pure play private credit” down another turn or two on earnings.
The balance sheet allows OWL to survive a rough patch, but it does not ensure that shareholders buying at $10 will be compensated for the risk they are taking if the private-credit cycle moves from early stress to full repricing.
The broader context is not particularly friendly for a highly concentrated credit platform. The US 10-year Treasury remains above 4%, real yields are positive, and the market is still debating whether the Fed can deliver the 50 bps of cuts priced for the next year without reigniting inflation. At the same time, AI-related capex plans from hyperscalers explode into multi-hundred-billion-dollar ranges, while questions around ROI, power constraints and regulatory oversight grow louder. That cocktail supports short bursts of risk-on – which can lift OWL tactically – but structurally it keeps funding costs high and risk premia on opaque private structures elevated. If redemptions continue through 1H–2H 2026 and more critical audit matters or political attacks hit AI financing, this environment becomes exactly the wrong one for a firm whose engine is leveraged exposure to private, mark-to-model credit.
Taking all of this together – the heavy concentration in private credit, the AI-linked SPV complexity, the rise in redemptions and asset sales, the thin adjusted FCF yield versus dividend, and the macro starting point – Blue Owl Capital stock (NYSE:OWL) looks more like a levered macro trade than a mispriced defensive yield play. At roughly $10 per share with an 8–9% cash yield, the stock can certainly rally hard on any sequence of “good news” – lower long-term yields, easing redemptions, calmer headlines around AI financing. But structurally, the risk that private credit is only at the early stage of a broader repricing is not reflected enough in the 3% adjusted FCF yield and still-elevated growth expectations built into the story. On a risk-adjusted basis, the stance here is clear: OWL is closer to a Sell / avoid for cautious capital. Any exposure should be treated as tactical, sized small, and monitored tightly against credit, redemption and AI-regulation headlines, not as a long-term sleep-at-night compounder at this stage of the cycle.
That’s TradingNEWS.com
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