Barclays Downgrades Blue Owl, Upgrades StepStone Amid AI Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 02 2026
0mins
Should l Buy OWL?
Source: seekingalpha
- Rating Changes: Barclays downgraded Blue Owl Capital (OWL) to Equalweight from Overweight while upgrading StepStone Group (STEP) to Overweight from Equalweight, reflecting concerns about the impact of AI fears on the private credit market, particularly on business development companies.
- Slowing Inflows: Blue Owl's largest fund, OCIC, saw inflows decrease from approximately $600 million per month in November to $208 million in February, indicating a growing dependency on non-traded BDCs, which may lead to increased outflows in the future.
- Redemption Pressure: Blue Owl experienced quarterly redemptions exceeding 5% of net asset value in Q4, translating to over $1 billion in outflows, with analysts suggesting that this trend could worsen due to software and AI-related concerns.
- Market Opportunity for StepStone: StepStone has outperformed expectations in the wealth channel and is significantly less exposed to non-traded BDCs compared to peers, leading analysts to view this as an attractive entry point, with expectations for stable inflows into its wealth products.
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Analyst Views on OWL
Wall Street analysts forecast OWL stock price to rise
15 Analyst Rating
12 Buy
3 Hold
0 Sell
Strong Buy
Current: 9.180
Low
18.00
Averages
21.13
High
28.00
Current: 9.180
Low
18.00
Averages
21.13
High
28.00
About OWL
Blue Owl Capital Inc. is an alternative asset management company. The Company deploys private capital across Credit, GP Strategic Capital and Real Estate platforms on behalf of institutional and private wealth clients. Its product platforms include Credit, GP Strategic Capital and Real Estate. Its credit products offer private financing solutions primarily to upper-middle-market companies. Its credit products are offered through a mix of business development companies, long-dated private funds, managed accounts and collateralized loan obligations. It is focused on acquiring equity stakes in or providing debt financing to private capital firms. Its Real Estate products are focused on acquiring triple net lease real estate occupied by investment-grade or creditworthy tenants. Its Real Estate products are offered through Permanent Capital vehicles, including its real estate investment trusts, and long-dated private funds. It offers asset management services to the insurance industry.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Analysis of OWL Options Contracts and Investment Opportunities
- Put Option Appeal: The current bid for the $7.00 put option is 45 cents, and if an investor sells to open this contract, they commit to buying the stock at $7.00, effectively lowering their cost basis to $6.55, which represents a 23% discount from the current price of $9.08, making it attractive for those interested in OWL shares.
- Yield Potential Assessment: Should the put option expire worthless, the premium would yield a 6.43% return on the cash commitment, or 7.87% annualized, referred to as YieldBoost, highlighting the potential attractiveness of this investment strategy.
- Call Option Return Analysis: The $10.00 call option has a current bid of 50 cents, and if an investor buys OWL shares at $9.08 and sells this call, they could achieve a total return of 15.64% if the stock is called away at the February 2027 expiration.
- Risk and Reward Trade-off: Given that the $10.00 strike price is approximately 10% above the current trading price, there is a possibility that the covered call could expire worthless, allowing the investor to retain both the shares and the premium collected, further enhancing the investment's return potential.
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Intel Shares Surge 19% After Earnings Report, Highlighting Turnaround
- Intel Earnings Surge: Intel's stock soared 19% in after-hours trading following its earnings report, now trading around $79, marking a remarkable recovery from a low of $20 just 18 months ago, indicating strong market confidence in its growth prospects.
- Oracle Stock Volatility: Oracle's shares fell 6% today but rebounded in after-hours trading, gaining 20% in April and 34% year-to-date, yet remain nearly 50% below last September's peak, reflecting uncertainty in its performance outlook.
- Private Equity Struggles: Carlyle Group dropped 4.4% on Thursday, down 30% since last September, while Apollo Global and KKR fell 3.3% and 4%, respectively, highlighting a broader weakness in the private equity sector that investors should monitor closely.
- Procter & Gamble and Norfolk Southern Watch: Procter & Gamble's stock has declined 3% over the past three months, 15% off last year's 52-week high, while Norfolk Southern rose 12% and hit a new high, showcasing contrasting performances that warrant investor attention moving forward.
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U.S. Regulators Intensify Scrutiny of Private Credit Risks
- Regulatory Action Intensifies: U.S. financial regulators are ramping up their investigations into the $3 trillion private credit industry, and while they are not sounding urgent alarms, investor fears have led some backers to withdraw capital, indicating a fragile market confidence.
- SEC Investigations Launched: The Securities and Exchange Commission has initiated several enforcement probes into large private credit managers, assessing how they value loans and whether they adhere to disclosed policies, reflecting a heightened focus on industry transparency from regulators.
- Investor Redemption Pressure: Recently, investors sought to redeem over $20 billion from private credit firms, with only 50% of requests fulfilled, raising significant concerns among regulators about liquidity risks in the sector.
- Treasury Information Requests: The U.S. Treasury Department has sent requests for information to private credit fund managers and insurance companies regarding their business models and leverage levels, indicating regulators' worries about potential spillover risks into the broader financial system.
See More
Major Fund Managers Increase Investment in Private Credit
- Record Inflows: According to LSEG Lipper, 22 BDC funds attracted $868 million in the first quarter, marking the highest inflow ever, indicating strong investor confidence in private credit despite redemption pressures.
- PIMCO's Bond Purchase: Bond fund manager PIMCO made headlines last week by purchasing the entire $400 million bond issuance from private credit firm Blue Owl Capital, demonstrating that large investors are still actively seeking opportunities amid market uncertainty.
- Successful Direct Lending Fund: Golub Capital launched a direct lending fund that raised approximately $320 million from 14 institutional investors, showcasing robust demand for private credit despite concerns over risks in the software services sector.
- Continued ETF Inflows: VanEck's GPZ ETF has seen no outflows in the past three months and attracted $110.06 million in inflows, suggesting that investors perceive current market conditions as an opportunity to invest at discounted prices.
See More
Alternative Asset Managers Face Major Test Amid AI Concerns
- Investor Exodus: Wealthy individuals are pulling money from illiquid private loan funds due to concerns over AI's potential impact on portfolio companies, leading to significant outflows for alternative asset managers, with Blackstone's retail funds now accounting for 24% of total assets.
- Stagnant Private Credit Fundraising: According to S&P Global, private credit fundraising was nearly flat at $49.9 billion in Q1 2023, with direct lending dropping to $10.7 billion, the lowest level in three years, indicating structural concerns about liquidity and valuation credibility.
- Shift in Market Sentiment: Oppenheimer analysts have cut price targets for several firms ahead of quarterly earnings, reflecting a change in investor perceptions, particularly under pressure from direct lending and retail redemptions.
- Private Equity Exit Constraints: While there were high expectations for private equity exits, with around 29,000 companies anticipated to exit by 2026, high interest rates and geopolitical tensions have dampened market sentiment, leading to decreased confidence in liquidity and valuations.
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NEWMARK GUIDES BLUE OWL IN $2.4 BILLION PURCHASE OF NET LEASE HEALTHCARE REIT SILA REALTY TRUST
- Acquisition Announcement: Newmark has announced a $2.4 billion acquisition of a net lease healthcare real estate trust.
- Focus on Healthcare: The acquisition emphasizes Newmark's strategy to expand its portfolio in the healthcare sector.
See More
Analysis of OWL Options Contracts and Investment Opportunities
- Put Option Appeal: The current bid for the $7.00 put option is 45 cents, and if an investor sells to open this contract, they commit to buying the stock at $7.00, effectively lowering their cost basis to $6.55, which represents a 23% discount from the current price of $9.08, making it attractive for those interested in OWL shares.
- Yield Potential Assessment: Should the put option expire worthless, the premium would yield a 6.43% return on the cash commitment, or 7.87% annualized, referred to as YieldBoost, highlighting the potential attractiveness of this investment strategy.
- Call Option Return Analysis: The $10.00 call option has a current bid of 50 cents, and if an investor buys OWL shares at $9.08 and sells this call, they could achieve a total return of 15.64% if the stock is called away at the February 2027 expiration.
- Risk and Reward Trade-off: Given that the $10.00 strike price is approximately 10% above the current trading price, there is a possibility that the covered call could expire worthless, allowing the investor to retain both the shares and the premium collected, further enhancing the investment's return potential.
See More
Intel Shares Surge 19% After Earnings Report, Highlighting Turnaround
- Intel Earnings Surge: Intel's stock soared 19% in after-hours trading following its earnings report, now trading around $79, marking a remarkable recovery from a low of $20 just 18 months ago, indicating strong market confidence in its growth prospects.
- Oracle Stock Volatility: Oracle's shares fell 6% today but rebounded in after-hours trading, gaining 20% in April and 34% year-to-date, yet remain nearly 50% below last September's peak, reflecting uncertainty in its performance outlook.
- Private Equity Struggles: Carlyle Group dropped 4.4% on Thursday, down 30% since last September, while Apollo Global and KKR fell 3.3% and 4%, respectively, highlighting a broader weakness in the private equity sector that investors should monitor closely.
- Procter & Gamble and Norfolk Southern Watch: Procter & Gamble's stock has declined 3% over the past three months, 15% off last year's 52-week high, while Norfolk Southern rose 12% and hit a new high, showcasing contrasting performances that warrant investor attention moving forward.
See More
U.S. Regulators Intensify Scrutiny of Private Credit Risks
- Regulatory Action Intensifies: U.S. financial regulators are ramping up their investigations into the $3 trillion private credit industry, and while they are not sounding urgent alarms, investor fears have led some backers to withdraw capital, indicating a fragile market confidence.
- SEC Investigations Launched: The Securities and Exchange Commission has initiated several enforcement probes into large private credit managers, assessing how they value loans and whether they adhere to disclosed policies, reflecting a heightened focus on industry transparency from regulators.
- Investor Redemption Pressure: Recently, investors sought to redeem over $20 billion from private credit firms, with only 50% of requests fulfilled, raising significant concerns among regulators about liquidity risks in the sector.
- Treasury Information Requests: The U.S. Treasury Department has sent requests for information to private credit fund managers and insurance companies regarding their business models and leverage levels, indicating regulators' worries about potential spillover risks into the broader financial system.
See More
Major Fund Managers Increase Investment in Private Credit
- Record Inflows: According to LSEG Lipper, 22 BDC funds attracted $868 million in the first quarter, marking the highest inflow ever, indicating strong investor confidence in private credit despite redemption pressures.
- PIMCO's Bond Purchase: Bond fund manager PIMCO made headlines last week by purchasing the entire $400 million bond issuance from private credit firm Blue Owl Capital, demonstrating that large investors are still actively seeking opportunities amid market uncertainty.
- Successful Direct Lending Fund: Golub Capital launched a direct lending fund that raised approximately $320 million from 14 institutional investors, showcasing robust demand for private credit despite concerns over risks in the software services sector.
- Continued ETF Inflows: VanEck's GPZ ETF has seen no outflows in the past three months and attracted $110.06 million in inflows, suggesting that investors perceive current market conditions as an opportunity to invest at discounted prices.
See More
Alternative Asset Managers Face Major Test Amid AI Concerns
- Investor Exodus: Wealthy individuals are pulling money from illiquid private loan funds due to concerns over AI's potential impact on portfolio companies, leading to significant outflows for alternative asset managers, with Blackstone's retail funds now accounting for 24% of total assets.
- Stagnant Private Credit Fundraising: According to S&P Global, private credit fundraising was nearly flat at $49.9 billion in Q1 2023, with direct lending dropping to $10.7 billion, the lowest level in three years, indicating structural concerns about liquidity and valuation credibility.
- Shift in Market Sentiment: Oppenheimer analysts have cut price targets for several firms ahead of quarterly earnings, reflecting a change in investor perceptions, particularly under pressure from direct lending and retail redemptions.
- Private Equity Exit Constraints: While there were high expectations for private equity exits, with around 29,000 companies anticipated to exit by 2026, high interest rates and geopolitical tensions have dampened market sentiment, leading to decreased confidence in liquidity and valuations.
See More
NEWMARK GUIDES BLUE OWL IN $2.4 BILLION PURCHASE OF NET LEASE HEALTHCARE REIT SILA REALTY TRUST
- Acquisition Announcement: Newmark has announced a $2.4 billion acquisition of a net lease healthcare real estate trust.
- Focus on Healthcare: The acquisition emphasizes Newmark's strategy to expand its portfolio in the healthcare sector.
See More
