BX Blackstone Inc. : Bullish and Bearish Analyst Opinions

Private credit firms oversold on overblown concerns.

Growth trade rebuilding supports risk-on assets.

Bullish on Blackstone due to valuation.

The speaker calls Blackstone's $10 billion capital raise for opportunistic credit "exactly the right move" and "brilliant," directly linking it to the problems emerging in direct lending. Dislocation and distress in direct lending (particularly software) create the need for capital solutions, which is the core mandate of opportunistic credit strategies. LONG because the firm is strategically positioning capital to capitalize on the dislocations the speaker has identified as severe and lasting, aligning with Marathon's own activity in the space. The timing of the opportunity may be later than expected, or the fund may struggle to deploy capital at attractive returns if the distress is less severe than forecast.

Leyla states she is "watching the equity of the asset managers" like Blackstone, Ares, and Apollo, noting that sentiment is very negative and fee revenue is likely to decline as assets under management in their semi-liquid funds shrink due to outflows. These alternative asset managers' revenues are tied to fees from capital managed. The current redemption crisis in their semi-liquid private credit funds threatens to shrink that asset base. Extreme negative sentiment may have created a potential opportunity. WATCH because the negative catalyst (fee pressure) is clear and present, but extreme pessimism may have created a future entry point. It is not yet a buy signal. Outflows could be more severe and prolonged than expected, leading to greater fee erosion. The equity may not be cheap enough to compensate for the fundamental pressure.

The speaker explicitly states that firms like Blackstone, KKR, and Ares have grown from managing $40 million to nearly a trillion dollars, a result of structural change in the marketplace that is continuing. This structural change (growth in private markets, capital formation, consolidation) rewards good work with more work—specifically, managing more money. Size in private markets is not the enemy of performance but enhances it through greater resources and relevance. The firms at the center of this secular trend are positioned for continued disproportionate growth and success. A severe, prolonged market downturn that disrupts the ability to originate good investments and manage risk effectively.

Cramer prefers Blackstone over Blue Owl, saying it yields 5% and is "better run." In the private equity/credit space, Blackstone's management and yield make it superior for exposure. Go with Blackstone for better performance and income in the financial sector. Private market downturns, interest rate sensitivity, credit losses.

Jim Cramer stated that private equity stocks like Blackstone and Apollo have been the most toxic area of 2026 but blasted off in today's trading. This move occurred as market experts detected that the so-called private credit crisis may have gone too far, indicating a potential overreaction and rebound opportunity. WATCH for a possible stabilization or recovery after severe declines, but caution is advised due to the toxic label and inherent risks. The private credit crisis could worsen, leading to further declines and validating the bearish view.

Speaker discusses Apollo (APO), Blackstone (BX), and Ares (ARES) as potential bottom-fishing candidates in the beaten-down private capital space. Notes they were top gainers in the S&P on the day of recording. These stocks are down significantly (e.g., BX down ~40%) despite forward EPS estimates near all-time highs, creating a disconnect. The core business issue is an expected terrible fundraising environment in 2026, not necessarily widespread defaults in current holdings. The group is worth monitoring for a potential bounce if the private credit panic subsides and the feared systemic spillover does not materialize. Apollo is highlighted as potentially being more cautious and better positioned. The private credit/equity marks are indeed wrong, leading to significant NAV declines and sustained investor outflows, creating a vicious cycle.

1. FACT: There is a growing reassessment of private credit exposure, with alternative asset management stocks facing distribution issues. 2. BRIDGE: If the current energy shock forces central banks to maintain higher rates (stagflation), the economy will slow down. This will trigger a "snowball effect" where investors demand liquidity from private credit funds. Because these funds hold illiquid assets, a rush for the exits will severely pressure the balance sheets and fee structures of alternative asset managers. 3. VERDICT: WATCH. Alternative asset managers are highly vulnerable to a stagflationary environment where credit quality deteriorates and LPs demand distributions. 4. KEY RISK: A soft landing where inflation cools without a recession, allowing private credit markets to continue operating without liquidity crunches.

"The issue is really focused on Direct Lending... There has been a really big buildup in the assets in that space... Software is more than 20% of private credit, direct lending broadly... AI is challenging that narrative as we speak." Large private credit and Business Development Company (BDC) managers, like Blackstone (BX) and Ares Capital (ARCC), have significant exposure to direct lending portfolios heavily weighted towards software companies. These loans were made at high valuations based on growth assumptions that AI is now disrupting. This will lead to loan impairments, markdowns, and investor redemptions, creating a liquidity crisis specifically for these asset managers. SHORT the leading publicly-traded private credit managers and BDCs most exposed to direct lending and software. They face a cycle of writedowns, reduced fee income, and fund outflows. A swift resolution to the software/AI disruption narrative; strong underlying cash flows from portfolio companies; managers successfully re-categorize or restructure assets to avoid marks.

"It's hard to reconcile that kind of commentary [about private credit being like 2008] with the actual facts we see on the ground... When we do private credit, we either do it unleveraged... or less than one time levered... I don't see... something larger systemic." Gray defends the health of the private credit market, arguing its structural soundness compared to the banking system pre-2008. As the world's largest alternative asset manager and a major private credit player, Blackstone (BX) benefits from sustained growth and a lack of systemic disruption in this high-fee business segment. Market fears are presented as overblown, which, if correct, should support BX's valuation. LONG on Blackstone as the dominant, publicly-traded player positioned to capture growth in private credit, especially if a feared systemic crisis does not materialize. A severe economic downturn that causes private credit defaults to spike well above historical averages; prolonged high interest rates pressuring portfolio companies; significant outflows from its funds.

All the regional banks in the U.S... it will force people to look at their positions if those underwriting standards have slipped... If pockets of private credit get adjusted that's a very good healthy cleanup. As US regional banks face intense regulatory scrutiny and are forced to repair their balance sheets, they will pull back from commercial lending. This creates a massive funding vacuum that large, well-capitalized alternative asset managers (private credit) will fill, allowing them to capture market share with highly favorable lending terms and wider margins. Mega-cap alternative asset managers will be the primary beneficiaries of the structural decline in regional bank lending capacity. A severe macroeconomic recession causes a spike in defaults within existing private credit portfolios, leading to massive markdowns that outweigh the benefits of new lending opportunities.

"The obvious one right now... is effectively the private credit secondary... you buy that at a discount to the NAV and you can generate the incremental premium." As traditional drawdown funds face liquidity demands from LPs who need cash, alternative asset managers with dry powder can step in as liquidity providers. By acting as price setters in the secondary market, these firms can acquire high-quality private credit assets at steep discounts to their Net Asset Value, locking in outsized yields and premium returns. LONG because alternative asset managers are perfectly positioned to capitalize on LP liquidity distress, acquiring assets at bargain prices. A severe macroeconomic recession could cause actual default rates in the underlying private credit portfolios to spike, wiping out the NAV discounts.

There are cracks forming in private credit with halting of withdrawals from private credit funds from BlackRock, Blackstone, Blue Owl... software companies that have taken loans in private credit that are now insolvent. Software companies disrupted by AI are defaulting on private credit loans. Because these markets are opaque, the losses are not fully realized yet, meaning these asset managers carry hidden risks on their balance sheets. AVOID private credit managers until the extent of the software defaults is priced in and credit spreads stabilize. Fed liquidity injections could bail out these borrowers, preventing widespread defaults and allowing funds to resume normal operations.

"We were telling the market to discount the present value of future cash flows mathematically to infinity. There are some people that would argue that today, there still is that overhang. And that's what we're seeing in the private credit markets." The massive expansion of the Fed's balance sheet and years of zero interest rates pushed investors far out on the risk curve, fueling a massive boom in private credit and alternative asset lending. Because these loans were underwritten in a highly accommodative environment, the sector now holds an "overhang" of hidden risks. As the Fed maintains restrictive policy, highly leveraged borrowers in the private credit space face elevated default risks, which will eventually hit the balance sheets and fee revenues of major alternative asset managers and Business Development Companies (BDCs). AVOID. The structural overhang of ZIRP-era loans adjusting to a higher-for-longer rate environment makes private credit managers and BDCs highly vulnerable to markdowns. If the Fed is forced to cut rates aggressively due to a sudden economic downturn, the refinancing pressure on private credit borrowers would be alleviated, potentially boosting these stocks.

The headline risk is when all these funds stop allowing redemptions... I'm comfortable with the big ones. I'm comfortable with the big firms because they have very, very mature risk management. Smaller private credit funds are heavily invested in illiquid loans and may face a liquidity crisis if investors rush for redemptions. This will cause a flight to quality, where capital flees smaller operators and consolidates into mega-cap alternative asset managers (like BlackRock, Blackstone, and Apollo) that have the balance sheets and credit facilities to weather redemption requests. LONG. Large alternative asset managers will win market share and investor trust as smaller private credit funds face liquidity stress. A systemic credit freeze could drag down the entire financial sector, regardless of individual firm capitalization, similar to the initial panic phases of past financial crises.

"VC backed companies are more likely to use AI than PE backed companies which are more likely to use AI than all other companies... A PE firm might be working with a large retail chain. It might be working with a large hospital network." Large private equity firms like Blackstone (which is reportedly in talks to tie up with Anthropic) have the board seats and top-down authority to mandate AI adoption across massive portfolios of non-tech companies. This gives PE firms a unique operational moat to drive massive productivity gains, margin expansion, and higher exit valuations compared to standard public companies. LONG. PE firms that successfully force AI integration across legacy industries will generate outsized alpha. AI integration in legacy businesses (hospitals, retail) faces severe regulatory, data privacy, and cultural hurdles that could delay or destroy expected ROI.

The information reported a potential tie up between private equity and anthropic, in this case, the Blackstone with Anthropic... private equity is very different than like each individual enterprise deciding whether or not to use AI. I mean it can just be mandated from the top down. If Blackstone secures a strategic partnership with the leading enterprise AI model, it can force rapid AI adoption across its massive portfolio of non-tech companies (retail, hospitals, logistics). This top-down mandate will drastically cut operational costs and boost margins across Blackstone's holdings, increasing the firm's overall returns. LONG. Blackstone gains a unique structural advantage in modernizing legacy businesses through forced AI integration. The rumored tie-up falls through, or portfolio companies face severe implementation hurdles and security risks when deploying AI at scale.

Anthropic is in talks with Blackstone and other firms to form an AI joint venture embedding Cloud across their portfolio companies. Blackstone can use its board control to force portfolio companies to adopt AI, drastically reducing their operational costs. This margin expansion directly boosts Blackstone's fund IRR, making their funds more attractive to LPs, driving higher performance fees, and increasing the firm's overall valuation. LONG BX as a primary beneficiary of AI-driven cost optimization in the private markets. Implementation costs of AI may offset initial savings, or AI models may not be reliable enough to fully replace specialized human workflows.

"BlackRock, Blackstone and now Cliffwater and Morgan Stanley... When people rush to the gates like this, it then forces managers to make a decision. Do they cap the exits... Redemption requests from the flagship private credit fund hit a record 14%." Retail and institutional investors are panicking over private credit's exposure to struggling sectors (like software) and opaque valuations. As funds are forced to cap redemptions, it damages trust and future fundraising capabilities, potentially forcing these alternative asset managers to mark down their books and suffer long-term fee revenue declines. WATCH. The private credit liquidity mismatch is flashing warning signs; monitor these asset managers for contagion or forced asset sales. Managers successfully transition to more transparent daily pricing (as Apollo is attempting), which restores investor confidence and stabilizes AUM before a broader liquidity crisis materializes.

"Investors... feeling nervous and worried enough about the future for private credit and the scale of its exposures to software to start wanting to pull their money out... J.P. Morgan yesterday decided to start restricting some of their lending to certain private credit funds." Retail redemptions combined with Wall Street banks restricting leverage facilities creates a liquidity squeeze for private credit funds. If they are forced to mark down illiquid software loans, it will hit the fee revenues and AUM of the alternative asset managers running these funds. WATCH. The vicious cycle of markdowns, redemptions, and bank caution makes the private credit space highly vulnerable right now. Managers successfully implement monthly pricing that calms investors, or the software sector rebounds, alleviating markdown pressure.

"I think the bigger concern I have is more about what's going on in the private equity and private credit space where, you know, if you look at like, you know, Blackstone, KKR, Blue Owl, you know, some of these stocks are down, you know, 30, 40% in the last three months." High-yield credit spreads (specifically BB versus CCC) are being monitored closely. If credit conditions worsen, these alternative asset managers face higher default risks in their private credit portfolios and a slowdown in deal-making, which directly impacts their fee generation and valuations. WATCH private equity and credit managers due to widening credit spreads and recent sharp drawdowns, monitoring for signs of systemic contagion. If the economy remains robust and rate cuts ease borrowing costs, credit stress could evaporate, causing these alternative asset managers to rebound sharply.

Private credit is in relatively good shape. A relatively small percentage of them have had any default issues. I don't really think there's a big problem right now in private credit default ratios. The broader market is overly fearful of systemic defaults in private credit, specifically regarding software loans. Because these portfolios are actually resilient and a near-term recession is not expected, major alternative asset managers will continue to collect strong yields and management fees without suffering the massive write-downs the market is pricing in. LONG alternative asset managers with heavy private credit exposure, capitalizing on the disconnect between market fear and actual portfolio performance. An unexpected, severe economic recession could trigger the exact wave of defaults and liquidity stress that the market is currently fearing.

You saw massive redemptions... at BlackRock this week. You saw it at Blackstone... the equity of these companies are getting demolished. All of the publicly traded BDCs are trading at a severe negative discount to their NAV... KKR is like the private equity shop and the equity of KKR is getting smothered. The market is aggressively selling off the equity of alternative asset managers due to headline fears of a "private credit bubble" and temporary retail fund redemptions. However, the underlying private credit loans have below-average defaults, strong structural protections, and organic liquidity. The market is mispricing the equity of these managers by pricing in worst-case scenarios that have not materialized. LONG. The sentiment-driven sell-off in alternative asset managers and BDCs has created a deep value opportunity, as the underlying private credit fundamentals remain intact. A severe, prolonged economic recession could eventually cause a spike in realized credit losses in the middle market, validating the market's current pessimistic pricing of these equities.

"You get access to an investment in the parent company, which collects fees... technically, closed fund probably will [trade at a discount to NAV], but the hedge fund, the asset manager itself... will be valued like some of the others." In the alternative investment space, the most lucrative position is being the fee collector (the General Partner/Asset Manager), not the fund investor. While closed-end funds suffer from NAV discounts and fee drag, the parent asset managers generate highly predictable, compounding revenue streams through management and performance fees. Rather than buying into a new, complex IPO to get a fraction of an asset manager, investors can directly buy established, publicly traded alternative asset managers that already possess massive scale and proven fee-generating power. LONG established alternative asset managers to capture superior fee-based economics without the structural NAV discounts associated with closed-end funds. A severe macroeconomic downturn or credit event that shrinks Assets Under Management (AUM), halts deal flow, and severely compresses performance fees across the alternative asset sector.

"The case for alternatives, particularly core infrastructure, real estate, hedge and even core private equity... private credit is just credit... you're still getting a premium versus public markets." In periods of high public market volatility and normalizing yields, institutional capital seeks diversified, less correlated return streams. Alternative asset managers with massive private credit and infrastructure arms will attract this capital as investors demand the yield premium that private markets offer over traditional fixed income. LONG. Alternative asset managers provide necessary diversification and yield premiums in a volatile, late-cycle environment, ensuring steady AUM growth. A severe economic recession could trigger higher default rates in private credit portfolios, damaging the performance fees and reputations of these managers.

Pento notes that negative real interest rates allowed entities like Blackstone to borrow at 3% and buy "thousands upon thousands of single family homes." He describes the current environment as a "credit bubble" where trillions were thrown into private equity and private credit. The Private Equity (PSP) and Private Credit models rely on cheap leverage and rising asset values. As rates normalize and the Fed potentially shrinks the balance sheet (removing liquidity), the cost of debt rises while asset values (homes/companies) fall, squeezing these firms from both ends. SHORT Private Equity proxies (like Blackstone or the PSP ETF) as the "unwind" trade of the cheap money era. Private credit markets remain opaque, allowing these firms to delay marking down assets longer than public markets.

"This thing called private credit which everybody and anybody was trying to sell to retail investors last year... smells like 2008 due to the hidden leverage." Whalen notes BlackRock (BLK) marked a loan from "100 cents to zero in just 3 months" and Apollo (APO) got "stuffed" on UK insolvencies. The private credit and private equity sectors are facing a reckoning due to valuation lags and "fraud." Unlike banks, these non-bank entities (Alternative Asset Managers) do not have government backstops. As defaults rise and "fake" equity valuations (PIK structures) are exposed, these stocks face significant reputational and financial risk. Avoid or Short these asset managers as the "private credit bubble" deflates. The Fed could cut rates aggressively, bailing out the floating-rate borrowers in these private credit portfolios.

Blankfein warns, "We haven't had a reckoning in a long time... investments were made [when rates were low]... nobody's been forced to price discover." He notes assets are accumulating on balance sheets at questionable values. The entities most exposed to assets that haven't been "price discovered" (marked to market) are Private Equity and Private Credit firms. They hold illiquid assets valued by internal models. If the "reckoning" occurs, these firms will face write-downs and liquidity crunches. WATCH (or AVOID). While Blankfein's base case is positive, he identifies this as the primary structural risk lurking in the system. The "soft landing" continues indefinitely, allowing these firms to grow out of their valuation problems without a crisis.