PRIV and Beyond: March 16th Update
Updating...
Welcome to the March 16th update for PRIV and Beyond!
We’ll get through PRSD/PRIV first and then a quick update. Short one this week!
Volumes, Flows, Assets
Somewhat quiet last week, we did see some movement in PRIV.
PRIV has a 150,000 share redemption with a total volume of 359,800 shares for the week.
PRSD had no share changes and a volume of 34,000.
Today (3/16) current has a PRSD with 800k in volume and I did see some bid side prints on the private credit assets which would indicate shares being redeemed versus created but we won’t know until tomorrow. You can check with my handy PRIV app that is updated every day!
PRSD’s small outflow last week lead to them liquidating their position in AP Chia. This coincides with PRIV selling $2mm worth of it during the 150k share redemption.
Also some small trimming of AP Oryx positions.
Other Funds & Macro
I’m got a screen setup in ETF Action to track all these private asset ETFs. We can see that PRAB is now listed but otherwise not a lot of flows moving around in there.
XOVR continues to be way way over the line for illiquidity with their SpaceX position with no solution in sight. They pulled all their cash out of the SPV but it remains 35% or more of the fund.
Apollo
https://www.wsj.com/finance/investing/top-apollo-executive-sounds-off-on-arrogance-in-private-markets-4f09b5cb
John Zito, co-president of Apollo’s asset management group has been aggressively attacking the rest of the private credit industry for their unwillingness to be honest about where their marks are. This continues the winning streak for Apollo in my book.
As I’ve been talking about and talked about on my panel last week, I think the majority of private credit is just fine. The lenders, like Apollo, that are focused on being “boring” as Zito would likely put it are not chasing borrowers. They’re not partnering with PE firms that are way out over their skis and needing to gobble up everything in sight.
H o w e v e r.
I think the idiots concentrated in SaaS company lending need to be honest that the EV of a lot of their book is way way lower than they’re reporting.
On vulnerabilities in private equity
Zito sought to shift the focus to private equity, where Apollo has less exposure than most of its peers. He suggested investors’ voracious demand for buying stakes in existing private-equity investments but wariness of the private debt underpinning those deals doesn’t add up, since the equity would be junior to the debt if there were major problems with these assets.
“There’s . . . unlimited demand for secondary private equity but they are worried about private credit which finances 80% of those portfolios . . . I can’t compute, but I’m the dumb guy. I don’t understand. I start saying this and I get these blank stares back at me like OK, I don’t know.”
(Some might say private-equity funds are built assuming some bad deals and some home runs, while credit funds tend to be designed to deliver predictable returns.) Asked where he sees the pain in Apollo’s private-equity portfolio or those of other firms, Zito said:
“I literally think all the marks are wrong. Is that what you’re asking me? I think private-equity marks are wrong.”
This is an exemplary attitude to have. I try to be the same way. I assume I’m an idiot and try to work backwards. We should all be approaching this industry in the same way. You cannot just trust marks.
Look at the changes we’ve seen since PRIV launched. I can now see private asset trading prices in TRACE. I know if they’re close/on top of their mark for products. Do I want more? Yes! I always want more! I want to be treated like an LP. Send me monthly updates on these assets.
Final Thoughts:
There is still a lot happening back here.
I can’t talk about it yet.
Don’t fret. I won’t be stopping these little emails but there will be some changes. I don’t know what they are yet!
More of my latest work:
Your Private Credit ETF Crash Course - ETF.com
Private Credit ETFs 101: Business Development Companies - ETF.com
Private Credit ETFs 101: Collateralized Loan Obligation - ETF.com
Have a great week!
Leave a comment/note/send me a message about my app/data and let me know what I can do better or just get rid of! No wrong answers.
Go read these people:
Dave Nadig : Nadig.com / ETF.com
Tony Dong : Linkedin / ETFCentral.com
Nicholas Phillips : Linkedin / ETFCentral.com
Jeff Ptak : Substack | Morningstar
Tematica Signals : Substack
Phil Bak : Substack
CovenantLite : Substack
Brent Sullivan : Substack
Leyla Kunimoto : Substack
The Kotok Report : Substack
also anyone I subscribe to on Substack. I actually do read them!
Thanks for reading.
If you want to chat, please reach out to cmacwilliams@outerbeachc.com or connect with me on LinkedIn
Disclosure: I own one share of PRIV, two shares of PRSD, two shares of PRAB, one share of XOVR, and one share of RONB. None of this is investment advice and is presented solely for educational purposes.