OTF

Blue Owl Technology Finance ($OTF) CEO Buys $313K in Stock at 23% Discount to NAV as AI Infrastructure Boom Creates Value Opportunity

01/30/2026 21:33

Blue Owl Technology Finance ($OTF) CEO Erik Bissonnette has made two open-market purchases over the past two months. On November 20, he bought 12,500 shares at $13.27 ($166k), and on September 5, 10,000 shares at $14.70 ($147k), totaling $313k in personal capital. These purchases came as the stock trades nearly 40% below its 52-week high, signaling strong management conviction in the company's prospects. Blue Owl Technology Finance is a business development company (BDC) that listed on the NYSE in June 2025, specializing in debt and equity investments in U.S. technology companies, particularly software firms. With a market cap of $6.27 billion, it's the largest technology-focused BDC by total assets. As of September 30, 2025, the company maintains investments in 185 portfolio companies valued at $12.9 billion, with 80% in senior secured loans and 97% in floating rate instruments—a structure that benefits from higher-for-longer interest rates. The stock currently trades at $13.33, representing a 23% discount to its net asset value (NAV) of $17.27 per share. This is an extreme discount even within the BDC sector. The CEO's consecutive purchases at these levels suggest management views the current price as significantly below intrinsic value. The stock's P/E ratio of 7.41x and P/B of 0.78x are well below sector averages. The sharp decline stems from turmoil at parent company Blue Owl Capital. In November, Blue Owl's plan to merge two private credit funds was abruptly withdrawn after investor backlash over redemption freezes, sending shockwaves through Blue Owl-affiliated entities including OTF. However, OTF's portfolio quality and financial position remain robust. Third-quarter non-accrual rates stood at just 0.1% (3 basis points)—industry-leading—and the company maintains a conservative net debt-to-equity ratio of 0.57x. Operating performance remains solid. Q3 adjusted net investment income (NII) of $0.32 per share met market expectations. The company's 62% profit margin ranks at the top of the BDC sector, with return on equity of 10.58% remaining healthy. The quarterly dividend of $0.35 plus a $0.05 special dividend translates to a forward yield of 10.45%. Given the conservative portfolio management and strong profitability, dividend sustainability appears solid. The investment thesis connects to the AI infrastructure boom. Parent company Blue Owl recently closed Meta's $29 billion data center financing and partnered with Qatar's sovereign wealth fund on a $3 billion digital infrastructure platform. These mega-deals demonstrate Blue Owl's technology finance capabilities and indicate that the enterprise software and cloud companies in OTF's portfolio are benefiting from AI spending tailwinds. CEO Bissonnette called AI a "profound paradigm shift" on the Q3 earnings call, signaling plans to increase AI-related investments. Investment criteria are clear. First, if the NAV discount narrows to 15% or less, that signals normalization. Second, the February 18 Q4 earnings report should show maintained dividend and stable portfolio quality. Third, as lock-up tranches release (22% December, 32% March, 32% June), selling pressure should ease. Conversely, additional fund issues at parent Blue Owl or non-accrual rates exceeding 1% would require reassessment. Near-term volatility is likely to persist. Lock-up releases extend through June 2026, and liquidity concerns in the broader private credit sector remain unresolved. Over a 1-3 month horizon, $12.89 (52-week low) appears to be downside support, with $15-16 as near-term resistance. The February earnings announcement will be the critical near-term catalyst. Long-term prospects benefit from expanding AI infrastructure investment and eventual tech M&A recovery. Senior secured loans in OTF's portfolio offer relative safety during economic downturns, while the floating rate structure benefits from sustained higher rates. Steady NAV growth (up $0.10 quarter-over-quarter) and the CEO's direct purchases in the low-$13s provide positive signals for long-term investors. Risks are material. BDCs inherently face credit risk, with potential for surging non-accruals during recessions. With consumer confidence at post-2014 lows (84.5) and labor markets weakening, borrower default risk persists. Moody's and JPMorgan have warned about leverage and transparency issues across the private credit sector. Renewed fund problems at parent Blue Owl could trigger contagion effects. Bottom line: Blue Owl Technology Finance is trading at an excessive discount driven by parent company issues. The CEO's consecutive purchases, 23% NAV discount, and 10%+ yield create value appeal. However, ongoing lock-up releases and sector uncertainty suggest dollar-cost averaging is prudent. Long-term investors may find current levels attractive, though waiting for the February earnings confirmation is also reasonable. Short-term traders face high volatility with unclear catalysts. Income-focused investors should consider the opportunity, contingent on dividend sustainability.