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Private credit group Blue Owl and its employees recently made a significant investment of $200 million to purchase stock in the firm and two of its publicly traded vehicles. This move came after their shares experienced a decline following the failed merger of two of its funds. The insider purchases were aimed at supporting the stock of Blue Owl and the two listed credit funds, demonstrating the group’s confidence in its portfolio amidst concerns about falling interest rates and increasing redemptions from investors.
Blue Owl, which has seen its shares fall by 35% this year, went public in 2021 through a merger with a blank-cheque vehicle. The recent insider purchases were made in response to a Financial Times report about a proposed controversial merger between two of Blue Owl’s credit funds that caused shares to plummet last month.
In a statement, Blue Owl expressed that the purchases reflect their alignment with shareholders and confidence in their long-term strategy and performance. The asset manager had initially proposed merging its original private credit fund targeted at wealthy individual investors with its largest listed credit fund, a move that would have required investors in the private fund to accept a substantial reduction and restrict them from withdrawing funds. However, following the FT report, Blue Owl decided to explore other options.
Despite the market’s reaction, Blue Owl’s top executives reassured investors that the credit quality in their portfolio remained strong. Additionally, the company initiated stock repurchases, utilizing a pre-existing corporate stock buyback plan. In a recent filing, it was revealed that Blue Owl and its employees purchased approximately $70 million in stock of its listed asset management company and an additional $135 million in stock in its two largest listed private credit funds in November.
These purchases have contributed to a recovery in the shares of Blue Owl and its two funds, with all three experiencing a 5% increase in the past five trading days, reversing much of their recent share price declines. Analyst Brian McKenna from Citizens JMP Securities noted that buybacks and insider buying are strong signals that companies can send to the market, viewing the substantial purchase programs across all three public vehicles positively. He emphasized that this demonstrates a strong vote of confidence in Blue Owl’s future prospects.
