Other People's Money with Max Wiethe · Sep 27, 2026 · 1h 5m · 45m saved
With James Elbaor, Founder & Portfolio Manager at Marlton LLC
Blackstone's $82 billion private credit fund received redemption requests for 10% of its shares this quarter and paid out only 5%, the limit its documents allow. James Elbaor said that is the gate working, not the fund failing.
The worry behind the queue is that the loans are impaired and the valuations wrong. Elbaor said the problem is how the funds were sold, that the next phase is a wave of mergers among business development companies (BDCs), and that the listed BDCs trading well below their stated net asset value (NAV) are where investors can make money from it. He is already buying them.
"So I wouldn't say that there's trouble in the market. There's just a line for those that want out."
James Elbaor, Founder & Portfolio Manager at Marlton LLC, on Other People's Money with Max Wiethe. His firm specializes in closed-end funds, listed private assets, secondaries and asset managers, and trades the discounts and mergers this interview is about.
The full interview is covered here so you can skip it. 65 minutes of audio, 20 minutes of reading.
Here are the 16 takeaways that matter.
Key Takeaways
The private credit boom is over, Elbaor said, with no new capital flowing into the strategy
Gates are working as designed; the product was sold as if they did not exist
Blackstone's fund got requests for 10% of its shares against a 5% gate
Public BDC prices imply a cost of liquidity of 60 to 65 cents on the dollar, and he thinks NAV itself is fine
Holders of private interval funds should redeem and buy listed BDCs instead, which Marlton is doing
He expects BDC mergers at NAV or above, not at discounts, starting next fiscal year
Private equity's losses have not arrived yet because its funds have more time
Pershing Square has doubled since its April IPO while Blue Owl fell nearly 35%
He puts the difference down to permanent capital and fewer than 100 employees
Borrowing against a listed vehicle costs a fraction of a NAV loan on a private fund
Ryan Israel, not Bill Ackman, is Pershing Square's chief investment officer
1. Gates Work as Designed
The host said private credit funds had been limiting withdrawals for about 12 months, and that redemption requests were exceeding available liquidity again in the third quarter. He asked how big a problem that is.
The fault is in the sales pitch, not the gate
"Gating is doing what it was designed to do." — James Elbaor
"So, I think the bigger issue is that the product was sold as if the gate did not exist." — James Elbaor
He said these funds hold loans that cannot be sold quickly inside a structure that promises periodic withdrawals, which from the view of academic finance is "a classic duration risk issue," similar to a bank that borrows short and lends long and faces a run when everyone asks for their money back. The gate has always been in the fund documents, he said, as the mechanism that lets the fund keep going.
Blackstone's fund is the benchmark
He said the fund he and others watch is Blackstone's private credit fund, known as BCRED, which uses leverage.
"It's an $82 billion private credit vehicle." — James Elbaor
The fund capped redemptions again this quarter at its 5% gate after receiving requests for 10% of its shares outstanding, about $8 billion, he said. That does not mean $82 billion of assets must be sold within three years, or that investors want a quarter of their money back within a quarter. Blackstone will pay out the requests over time.
"So I wouldn't say that there's trouble in the market. There's just a line for those that want out." — James Elbaor
Bad loans or a bad structure
The host asked whether investors are leaving because they did not understand the product or because they believe the loans are impaired and the valuations wrong, saying that, like Jeremy Irons's line, you can be right or you can be first. Elbaor said artificial intelligence is clearly taking business from software-as-a-service (SaaS) companies, and that his own firm now uses AI tools rather than signing up for new SaaS providers. He then said it was more useful to talk about what asset managers can do next, because that is where his firm makes its money.
