Mark Lipschultz (2:24)

So we want a very healthy ecosystem and we have a very healthy ecosystem. We really do. And we can certainly come back to that. So credit quality is excellent in our book and that doesn't mean no defaults. Everyone's going to have defaults now. And then we all we said multitrillion dol industry, that's okay, you just can't have many and you have to get good recoveries. And that's exactly what we do at blow. And by the way, so do our peers and so do the banks. So the system is in a strong place. Then of course there's base rates and of course the direction of base rate travel. Everyone obviously sees it having eased from the peak. But again every time consensus spills to oh, it's obvious, you look at the Fed commentary now it's not quite so obvious how fast rates are going to go down. And then last is spread and spreads are on the kinds of the lower side of where we operate. But over a 10 year window they, they ebb and they flow. And remember we're building portfolios have hundreds of names in them. Some are from a couple of years ago, some are current and most importantly our overall spread, the premium that we offer to the alternative, the traditional marketplace has actually been stunningly steady and close to a couple hundred basis points. So yeah, we don't live in a vacuum and so spreads in the whole world are tight. Of course ours are tighter. You know equity markets are at all time highs. Like we don't, we don't live in isolation and in our spreads are a little bit tighter but in total it continues to do. We continue to deliver really outstanding investor results and that's why we had record fundraising results.

Interviewer (3:53)

I really like that point you made about okay, if we're concerned about private credit, shouldn't we be concerned about equity markets too? They both are trading and reflect a large part of this economy. I would then love to get your take on Metta yesterday. I know you're not a public stock guy but when they issued more debt meta shares fell. Do you think that there are starting to creep into the market some concern with Med of course is one of your partner but the large hyperscale spending and the amount of financing and debt that they're taking on. Is there any reason to be concerned? Because clearly the equity market is starting to show at least a little bit of nerves about it.

Mark Lipschultz (4:26)

Well, there's been several earnings reports this year this week from tech companies and actually some of them performed extraordinarily well announcing big capital programs. Right. Amazon and so I don't, I think it's hard to attribute it to one specific. In fact the collective result is of course tech is touching all time highs at the moment where as of this week people announced you know what, we're actually going to spend A lot more on AI infrastructure than we thought. Much more, actually. Right. This continuing curve, every time you look, it just keeps going up. And you listen to the commentary. And the commentary is we don't think we're spending enough. Microsoft says we don't have actually enough capacity to even fuel both AI and kind of our core business. So that that gap, very expensive to cross. That Rubicon, of course, is what creates the opportunity for great partnerships for us to bring that kind of capital in conjunction with these spectacular companies to build the backbone, which for us is the very safe way to participate, build the backbone for this infrastructure, the infrastructure for this future.

Danny (5:32)

I was talking with Z about the intel he gathers and you obviously are in the same sort of privileged position, right. You're talking to so many portfolio companies and CEOs, and you have an incredible view of, for example, the labor market. So, so what are you seeing in your portfolio companies or what are you hearing people say about the economy in regards to the labor market? Are they going to be slowing hiring or even reducing jobs as they replace some of that productivity with AI?

Mark Lipschultz (5:57)

So portfolio companies are, let's start with, very strong and healthy. We have 400 or so in our portfolio and on average growth remains both revenue and earnings in the high single digits. So it's a very healthy place.

Danny (6:09)

Now we're not strong companies can. Strong companies can reduce headcount as well?

Mark Lipschultz (6:12)

Absolutely. So now we have not seen any meaningful change in labor practices, but it is certainly the case that technology itself is making a lot of activity already more productive and we're at the very front edge. So you know this all. It is certainly the case that when you build and invest this kind of capital, you do ultimately have to get a return on it, and some of that will disrupt the traditional labor market. We are not hearing anything I would call systemic or dramatic at this point within the portfolio. And to the degree it's happening, it's really more about efficiency, technology. It's not about concern about the economy today.

Interviewer (6:48)

Blue Owl has also been on the forefront in moving into retail and offering wealth products to a wider swath of investors than traditionally had been. I just wonder, Mark, because this has been a period where it feels like people are laser focused with the magnifying glass. If I can mix all my metaphors on private credit with Jamie Dimon saying cockroach here, concern about fraud there, has it changed at all retail sentiment? Has it been harder to reach those people? Just in the volatility of headlines that have been coming out, out.

Mark Lipschultz (7:16)

So here's the really encouraging part about the wisdom of what you call retail investors, individuals taken together, you know, I think there's a propensity to want to either sort of people say oh, they don't understand. I actually think there's incredible wisdom in the individual investor world. And by the way, they're advised by really strong people, right? The financial advisors at the Merrill's and the Morgan Stanley's and the JP Morgan's, the Goldman Sachs, I mean all these Wells Fargo, all these fabulous places are advising people on making these choices basis. So here's what we're seeing. Wealth flows are accelerating even now this month over last. We see this every day. It's a very data driven business for us. We are accelerating in wealth this month over last. So actually I think people are seeing through this noise and it is a lot of noise. And to your point about, you know, sort of an item here, an item there, you know, I would suggest taking it when we take a step back because there's a, almost this kind of this mass hysteria taking hold about, about credit in general, private credit in particular. And it's just not anchored in any facts. It's anchored by repeating a few anecdotes and then kind of just creating the well, hey, you never know. And some of that is intentional. Some of it I'm sure is quite sincere by people that just don't, just aren't sure. But the truth is that our system, the private credit is not just blew out. Our peers are very good at what they do. The banks are very good at what they do. And in total, fortunately for the economy, we have a very healthy credit ecosystem. And to the earlier point, Danny, you repeated which things really important. Remember you cannot believe that we have an unhealthy credit ecosystem and a healthy stock market. Those are not compatible ideas.

Danny (9:04)

Well, and I mean as you point out, the concerns are belied by the fact that investors are still falling all over themselves to get access to funds like yours. Mark, great having you on the program. Thank you so much for joining us. Mark Lipschultz there of Blue Owl Capital.

Tom Keene (9:18)

Indiana University is shaping the future of health care. Advancing discoveries that become treatments for Alzheimer's, obesity, cancer and other rare and complex diseases. And training the next generation of providers, doctors and nurses trusted to address health challenges with skill, compassion and purpose. From the lab to the clinic, from research teams to patient care, IU talent is driving medical innovation, improving health outcomes and strengthening communities. See how IU solves what's next iu. Edu Impact this is Tom Keene inviting.

Tom Keene (9:54)

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