OWL

Blue Owl Capital ($OWL) Executive Makes $2.38M Consecutive Purchases Near Yearly Lows..."Bottom Buying at 18% Discount"

12/03/2025 22:18

Blue Owl Capital ($OWL) executives are sending a strong bottom-buying signal as senior management made substantial purchases while the stock trades near yearly lows. Executive Douglas Ostrover acquired a total of 158,000 shares over two consecutive days on December 1-2, investing approximately $2.38 million at an average price of $15.06. This represents about an 18% discount to the current stock price of $18.5, suggesting management views the current valuation as significantly undervalued. Blue Owl Capital is a major U.S. alternative asset manager with a $24.5 billion market capitalization. The company has established a strong position in alternative investments including private credit, real estate, and digital infrastructure, particularly emerging as a leader in the rapidly growing private credit market. The firm has been expanding its business scope through major deals including a partnership with Meta for a $29 billion data center project and a $7 billion BNPL loan purchase agreement with PayPal. However, the stock has endured a turbulent year. After reaching $25.2 in late January, shares plummeted in November when a planned merger of private credit funds was scrapped due to investor backlash. The company had pursued a merger between OBDC and Blue Owl Capital Corporation II, but was forced to withdraw the plan when investors raised concerns about withdrawal freezes and potential losses. This process resulted in a year-to-date decline of up to 32.8%, severely damaging investor confidence. Yet management's recent purchases carry significance beyond symbolic gestures. Ostrover's consecutive purchases were discretionary trades, not 10b5-1 plans, reflecting management's immediate assessment of current market conditions. More notably, employees purchased approximately $70 million in company stock and $135 million in the firm's private credit funds in November. This demonstrates that internal stakeholders maintain strong confidence in the company's long-term value and the quality of its private credit portfolio. The company's fundamentals remain solid. Third-quarter assets under management (AUM) increased 26% year-over-year to $295.6 billion, with new capital commitments reaching $14 billion. Adjusted fee-related earnings per share of 24 cents exceeded analyst expectations of 22 cents. Particularly, as the private credit market has grown to $3 trillion, demand for Blue Owl's core business areas continues to expand. A key metric for investors to watch is the potential revival of the fund merger. Company officials indicated they might reconsider the merger if OBDC's share price recovers, with OBDC currently trading at a 20% discount to net asset value. While a successful merger could create economies of scale and cost savings that enhance shareholder value, it also risks renewed investor opposition. Industry-wide concerns in private credit must also be considered. Recent bankruptcies of First Brands and Tricolor, along with fraud allegations involving telecom companies backed by HPS Investment Partners, have raised questions about risk management capabilities in the rapidly growing private credit market. Moody's has warned of systemic risks in private credit, with growing concerns about transparency and leverage levels across the industry. Nonetheless, Blue Owl maintains a relatively strong position within the industry. Large-scale partnerships with Big Tech companies like Meta and PayPal demonstrate the company's credibility and execution capabilities. Particularly, the ongoing AI and digital infrastructure investment boom is providing additional growth drivers for the company's real estate and infrastructure investment divisions. Investors need to consider several scenarios in the current environment. In an optimistic scenario, concerns about the private credit market prove overdone, and management buying effects could help shares recover to the $20-22 level. The base case scenario envisions gradual recovery with resolution of fund merger issues, with shares likely trading in an $18-20 range through year-end. However, if additional negative developments in private credit markets materialize or recession fears become reality, further declines to the $15 level cannot be ruled out. While management's low-price purchases are certainly a positive signal, investors should continue monitoring structural changes in the private credit industry and Blue Owl's adaptive capabilities. Quarterly results, new fund fundraising performance, and potential fund merger revival will be key variables determining the stock's direction going forward.