Blue Owl Technology Finance Corp. Announces September 30, 2025 Financial Results
Financial Performance: Blue Owl Technology Finance Corp. reported a third quarter GAAP net investment income per share of $0.28 and an adjusted NII per share of $0.32, with total investment income increasing to $322.6 million compared to the previous quarter.
Dividends and NAV: The company declared a fourth quarter regular dividend of $0.35 per share and five special dividends of $0.05 per share, while the net asset value per share rose to $17.27, reflecting unrealized gains in equity investments.
Investment Activity: New investment commitments for the third quarter totaled $1.0 billion, with sales and repayments amounting to $848 million, indicating a decrease in new commitments compared to the previous quarter.
Portfolio Composition: As of September 30, 2025, Blue Owl had investments in 185 portfolio companies with a total fair value of $12.9 billion, maintaining a low non-accrual rate of less than 0.1% of the portfolio at fair value.
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- Software Sector Hit: The iShares Tech-Expanded Software Sector ETF (NYSE:IGV) has plummeted nearly 20% year-to-date, making it the worst-performing industry, as fears mount that AI tools could disintermediate traditional software providers, causing forward P/E ratios for application software to drop from 35.3 to 23.7 and systems software from 35.5 to 23.3, reflecting market concerns over future earnings durability.
- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
- Insurance Broker Anxiety: Insurance brokers are facing disruption due to the integration of AI-driven tools, with the S&P Insurance Brokers industry index down 4% year-to-date; while the insurance sector remains relationship-driven, there are concerns that AI could erode commissions, impacting brokers' income stability.
- Asset Management Damage: Alternative asset managers are indirectly affected by significant exposure to private software companies, with many large firms down double digits year-to-date, as declining public software valuations raise concerns about their private portfolios, shrinking exit opportunities.
- Strategic Partnership: Five Point has formed a new residential land banking investment partnership with Blue Owl Capital through its Hearthstone platform, aimed at acquiring residential homesites in high-quality U.S. housing markets, leveraging Hearthstone's operational expertise and long-standing relationships with national homebuilders to enhance market competitiveness.
- Business Expansion Milestone: This collaboration marks an important first step for Hearthstone in scaling its land banking business, expected to provide broader growth opportunities and further solidify its position as a leading residential land banking platform.
- Equity Dilution Risk Control: Five Point has agreed to issue warrants to funds managed by Blue Owl that will only vest upon achieving specific capital contribution thresholds, ensuring that existing shareholders' equity will not be immediately diluted, with potential dilution occurring only if the warrants are exercised.
- Optimistic Market Outlook: Five Point's acquisition of the Hearthstone platform in 2025 aims to expand its asset-light, fee-generating business model, with expectations that this partnership will bring long-term growth opportunities, particularly in the rapidly developing residential market.
- Market Volatility Analysis: Evercore ISI highlights that recent pullbacks in momentum stocks have severely impacted several equities, particularly in software and precious metals, reflecting market concerns over the effects of artificial intelligence.
- Investment Opportunity Identification: Evercore has compiled a list of stocks termed 'Falling Knives,' which have dropped over 30% in the past year and currently have short interest in the 65th percentile or higher, indicating potential for rebound.
- Software Stocks Hit Hard: Companies like ServiceNow, Salesforce, and Workday have been significantly affected due to fears that AI could undermine their business, yet Evercore notes these stocks are still viewed as worthy investments among clients.
- Optimistic Market Outlook: Evercore maintains a bullish stance on U.S. equities, projecting that with no recession in sight and the Fed likely to cut rates, the SPX is on track for a year-end target of 7,750 points, indicating strong market potential.
- Market Opportunities: There are potential buying opportunities in the stock market due to recent significant declines in stock prices.
- Investment Strategy: Investors may find value in stocks that have been overlooked or undervalued amidst the market downturn.

Market Opportunities: There are potential buying opportunities in the stock market due to recent significant declines in stock prices.
Investment Strategy: Investors may find value in stocks that have been overlooked or undervalued following market crashes.
- Increased Pressure on Software Sector: The introduction of new AI tools by Anthropic has triggered a sell-off in software data provider shares, intensifying uncertainty in the private credit market, particularly regarding lending risks to software companies.
- Decline in Asset Management Stocks: Ares Management fell over 12%, Blue Owl Capital dropped more than 8%, and KKR and TPG saw declines of nearly 10% and 7%, respectively, reflecting investor concerns about AI's potential impact on cash flows and default risks.
- Rising Default Risks: UBS Group has warned that in an aggressive disruption scenario, default rates in U.S. private credit could rise to 13%, significantly higher than the projected stress for leveraged loans and high-yield bonds, estimated at 8% and 4%, respectively.
- Liquidity Issues Intensified: Although strains in private credit predate AI concerns, Jeffrey C. Hooke noted that existing liquidity and loan extension issues have been exacerbated by recent developments, adding new challenges to an already pressured sector.








