The short trade on private credit sponsors is over
Shorting public private credit sponsors is no longer attractive as the majority of the downside has already been priced in.
The argument
The guest noted that while major Wall Street firms are now offering ways to short these sponsors, the stocks have already declined 40% to 60% over the past three months, meaning investors have likely missed the trade.
The thesis, stress-tested
✓ What validates it
- ✓Stabilization or rebound in the stock prices of public credit sponsors
- ✓A pause in the downward trend of sponsor equity valuations
▸ Risks discussed
- ▸Sponsors could still experience further downside if credit defaults spike further
- ▸High volatility in public markets for historically private assets
Hear it yourself
"These guys have sold off forty, fifty, 60% in the past three months. So do you wanna go out and short the stock now? I think you kinda missed a trade. Yeah. Right? Yeah. Well, yes."
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