One business-development company's discount to its net asset value implies that 48% of its loans would have to default, while its net charge-offs run at about 0.1%, by the math of Tim Travis, publisher of the Value Options Letter, on The Acquirers Podcast.
Tobias Carlisle, principal of Acquirers Funds and the show's host, spent much of the conversation on the AI stocks that now make up about half of the S&P 500. Tim said the bigger mispricing sits in the stocks underneath them.
"That's the most challenging thing about this market — the hyperscalers, the semis, they're absolutely flying, and they are such a big part of the index that the index looks pretty healthy on the top. And then underneath there's this sort of carnage where there's actually a huge amount of opportunity." — Tim Travis
Tim co-wrote the book Value Options with Tobias, and his letter publishes a track record of every trade it has recommended. His BDC math comes from the loan-level data in those portfolios, not from their share prices.
The full episode is covered here so you can skip it. 28 minutes of audio, 8 minutes of reading.
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The Acquirers Podcast · Oct 22, 2026 · 28m · 20m saved
With Tim Travis, Publisher of the Value Options Letter · Tobias Carlisle, Principal at Acquirers Funds
Key Takeaways
October's AI pullback came from a data-center IPO that fell about 34% on its first day and an Anthropic filing that disappointed
Tobias thinks AI may already be improving itself, which he called the definition of the singularity
Tim expects AI to become as ordinary as electricity, the internet and hard drives did
Business-development companies trade at levels last seen in the Great Recession, despite portfolios of mostly senior, first-lien loans
BlueOwl Technology's discount implies 48% of the portfolio defaulting, against net charge-offs of about 0.1%
AI will ultimately be deflationary, Tim said, once AI demand stops bidding up memory, compute and energy
The top 15 companies are at least 47% of the S&P 500, and Tobias said a 50% decline is possible if that trade breaks
1. Breadth Returns to Value
Tobias opened on a change in October. For months, the AI stocks at the top of the index had carried it while the rest of the market lagged, and that gap had started to narrow.
Market breadth improved because the AI leaders stopped pulling away from everything else
"Market breadth has improved... because the index is so heavily weighted towards the big end of town, which is all of the AI stocks, the AI beneficiaries, which are a huge part of the index. It's been racing ahead, and the rest of the index has sort of been suffering relatively." — Tobias Carlisle
Tim traced the pullback in AI stocks to two events. The first was a foreign data-center company's IPO, which he believed was South Korean. The second was a funding filing from Anthropic.
A data-center IPO's first-day drop and an Anthropic filing knocked AI stocks back
"It was one of those data center companies that was doing the IPO, and it came out at the high end, and then it fell like 34% the first day... that kind of put AI down a little bit, and then Anthropic's filing wasn't as positive as some market prognosticators expected." — Tim Travis
Together, the two events pushed a modest rotation toward value stocks. The 10-year Treasury yield eased at the same time, from 5.3% to about 5.1%.
