Economist Mohamed El-Erian took to X (formerly Twitter) on Thursday morning with a question after Blue Owl Capital Inc (NYSE:OWL) permanently halted redemption
at its retail private credit fund.
“Is this a ‘canary-in-the-coalmine’ moment, similar to August 2007?” El-Erian wrote, citing a Financial Times report that Blue Owl “will permanently restrict investors from withdrawing their cash from its inaugural private retail debt fund.”
The idiom references the historical mining practice of using caged canaries to detect toxic gases underground — an early warning before disaster strikes.
What Blue Owl Did
Blue Owl announced Wednesday that investors in Blue Owl Capital Corp II (OBDC II) would no longer receive quarterly redemption windows.
Instead, capital would be returned through episodic payments as assets are sold over coming quarters and years. The move came alongside a $1.4 billion asset sale across three funds, including $600 million from OBDC II — 30% of its total assets.
How Serious Is It?
El-Erian stopped short of a direct 2008 comparison, writing that systemic risks are “nowhere near the magnitude of those which fueled the 2008 Global Financial Crisis, but a significant – and necessary – valuation hit is looming for specific assets.”
Meanwhile, Blue Owl co-CEO Marc Lipschultz said as recently as Feb. 5, that the firm sees “no red flags” in its loan book. CFO Alan Kirshenbaum acknowledged the firm is “behind its Investor Day goals” due to headwinds in private credit, AI, and software.
Short Interest And Price Action
Short interest in Blue Owl Capital recently fell slightly from 78.84 million to 78.61 million shares, representing 14.42% of publicly available shares. At the recent average daily trading volume of 14.01 million shares, short sellers would need approximately 5.61 days to cover their positions without materially moving the stock higher.
OWL closed Wednesday at $12.31, up 1.90% on the session. Blue Owl Capital shares were down 4.22% at $11.79 during premarket trading on Thursday, according to Benzinga Pro data.
Photo: T. Schneider via Shutterstock
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