Brant Beardall

"Private credit has kind of taken up, okay, we'll make the riskier loans... if we're going to start having another credit cycles, where do you see that come through? And that's private credit and that's what's happening now." Traditional banks tightened lending standards over the last decade, pushing lower-quality, higher-risk corporate borrowers into the private credit and Business Development Company (BDC) space. As the credit cycle turns, these private credit vehicles will experience a spike in non-accrual loans and defaults, leading to Net Asset Value (NAV) destruction and dividend cuts. SHORT public BDCs and private credit proxies, as they are holding the bag on the riskiest tier of corporate debt heading into a default cycle. A "soft landing" scenario where the economy remains resilient and interest rates drop could allow risky borrowers to refinance, preventing the anticipated wave of defaults.

"Private credit has kind of taken up, okay, we'll make the riskier loans... if we're going to start having another credit cycles, where do you see that come through? And that's private credit and that's what's happening now." Traditional banks tightened lending standards over the last decade, pushing lower-quality, higher-risk corporate borrowers into the private credit and Business Development Company (BDC) space. As the credit cycle turns, these private credit vehicles will experience a spike in non-accrual loans and defaults, leading to Net Asset Value (NAV) destruction and dividend cuts. SHORT public BDCs and private credit proxies, as they are holding the bag on the riskiest tier of corporate debt heading into a default cycle. A "soft landing" scenario where the economy remains resilient and interest rates drop could allow risky borrowers to refinance, preventing the anticipated wave of defaults.

"Private credit has kind of taken up, okay, we'll make the riskier loans... if we're going to start having another credit cycles, where do you see that come through? And that's private credit and that's what's happening now." Traditional banks tightened lending standards over the last decade, pushing lower-quality, higher-risk corporate borrowers into the private credit and Business Development Company (BDC) space. As the credit cycle turns, these private credit vehicles will experience a spike in non-accrual loans and defaults, leading to Net Asset Value (NAV) destruction and dividend cuts. SHORT public BDCs and private credit proxies, as they are holding the bag on the riskiest tier of corporate debt heading into a default cycle. A "soft landing" scenario where the economy remains resilient and interest rates drop could allow risky borrowers to refinance, preventing the anticipated wave of defaults.

"You look at our stock for example, we're sitting here trading literally a tangible book value... the biggest opportunity we have is to buy our shares back and increase the slice of the pie for our existing shareholders." When a bank trades at or below tangible book value (TBV) and management actively repurchases shares, the buybacks are highly accretive to the remaining shareholders. By pulling back on risky loan growth and focusing on buybacks, the bank establishes a valuation floor and structurally increases its book value per share. LONG WAFD as a value play with a management team demonstrating disciplined capital allocation and downside protection. A severe macroeconomic recession could cause unexpected loan losses, driving tangible book value down and negating the benefits of the buybacks.