CLOs Are Better Than Banks, Says World’s Largest Investor In CLO Equity

CLOs Are Better Than Banks, Says World’s Largest Investor In CLO Equity | Thomas Majewski

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Күн бұрын

Thomas Majewski, founder of Eagle Point Credit, joins Forward Guidance to share his insights from the somewhat opaque world of Collateralized Loan Obligations (CLOs). Majewski explains why he perceives that CLO equity enjoys a series of structural advantages, and he also shares his thoughts on the worlds of private credit and bank capital relief transactions. Filmed on December 11, 2023.
Please note that any past performance discussed in this presentation is not indicative of, or a guarantee of, future performance.
To reference performance and the discussion about Eagle Point Credit Company, please visit the website: www.eaglepointcreditcompany.com/
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Timestamps:
00:00 Introduction
00:11 What Are CLOs (Collateralized Loan Obligations)?
19:00 A Look Back At CDOs And 2008
31:42 Impact Of Rising Rates On Companies' Ability To Service Debt Loads
40:14 How Would "The CLO World" Handle A Potential Recession?
43:06 Banks Are Selling Credit Risk (i.e. Buying Insurance) Via "Regulatory Capital Relief" Credit Linked Notes (Are They Similar To Credit Default Swaps?)
54:15 Private Credit - Golden Age Or Biggest Bubble In The World?
01:00:13 Liability Structure of BDCs (Business Development Corporation)
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Пікірлер: 60

@rrrfamily565 6 ай бұрын

10 times levered loan product managed by normal people on the street? This sounds extremely safe 😂

@AJ-iu6nw 6 ай бұрын

it's better than banks!

@jabberwockytdi8901 6 ай бұрын

Nah it's more like 4-5 times, the loans are 1st lien and securitized on company assets unlike say corporate bonds or preferred shares. What do you mean "managed by normal people on the street" , you are just buying shares in a closed end investment vehicle , not managing anything , yes it's levered , so are some types of ETF. Not sure about US but most countries you have to certify as a sophisticated investor to buy more complex investments like companies investing in CLO's......

@jwg9338 6 ай бұрын

Should be far more worried about what this discussion means for banks.

@rrrfamily565 6 ай бұрын

@@jwg9338 when bank is in trouble, favilities like BTFD will exist to save everyone. When CLO as a sector will be in trouble in recession, who's gone save this?

@robbie31580 Ай бұрын

Banks are levered too

@ashanesubasinha8313 6 ай бұрын

Good information on CLOs

@diylong 6 ай бұрын

Good interview and an articulate logical guest not prone to hyperbole. Thanks for picking up this topic and Thomas.

@mattanderson6672 6 ай бұрын

Thhanks guys!!

@edreeves121 6 ай бұрын

Excellent information here 👍

@HoustonHamer 6 ай бұрын

I got alot of value out of this, thanks for making it happen

@pod11th31 6 ай бұрын

Isn't this CLO exactly same stuff that already caused lehman brothers crash and following credit crisis?

@BlockworksHQ 6 ай бұрын

we address in the interview...

@BlockworksHQ 6 ай бұрын

and the short answer is not really. Banks owned CLOs and they suffered impairments in 2008 but in the interview Majewski says that ultimately the equity tranches ended up performing very well as they were able to buy distressed assets on the cheap with par dollars. Whereas CDOs got destroyed. CDOs in question owned subprime mortgages where CLOs own loans to companies

@voonyeefong785 6 ай бұрын

Excellent interview and content!!

@leroyybrown 6 ай бұрын

Fascinating discussion in the CLO, private credit, BDC space takes me back to the 80’s Junk Bond market where the logic was that the high yield more than covers the losses and you still end up earning a higher return than say Treasuries or Munis. So for many of us this is the holy grail where we can earn SOFR plus 300 or more after fees. I’m sure many people approaching or in retirement would be happy with that.

@vitthalsrinivasan1871 6 ай бұрын

Thank you for this - it was very thought-provoking, and Jack Farley was excellent as usual. One question - could you (maybe in an upcoming show) - explain the implications of investing in ECC given that it is a closed-ended fund? I ask this as someone obviously interested in the div yields on ECC. As an international investor, however, I am not sure what I'd be getting into by investing in a closed-ended fund. Thank you.

@tactileslut 6 ай бұрын

Tiny chunks of large loans to huge companies. Secured. Variable. Uses locked-in capital, so avoids the vulture capital risk to the borrower but does pass through the capricious central bank actions. I learned something. [Then I got a juvenile giggle near the end when 40s and BBC and 150% full coverage came up. Yay, context.]

@bluecollarbullionballer4269 12 күн бұрын

I invest in ECC great product.Happy investing/stacking.

@Lex41127 6 ай бұрын

Why is the expense ratio 9% for your ECC fund

@nobobonobo 6 ай бұрын

Wtf lol, that's insane

@cats_ARE_better_than_you 6 ай бұрын

OXLC (a similar fund) is 13.84%! Why would anyone invest in these things. A DITM covered call on SPY would pay you a much higher overall return.

@wackzingo 3 ай бұрын

They borrow money to fund their investments and the interest they pay on those loans is part of the expense so it's really high right now since rates are high.

@edwardknowles3614 5 ай бұрын

48.10 Jack, do you know if there's any data available on his claim that loans transferred out of banks have outperformed?

@wiktorjespersen971 6 ай бұрын

Yea and who ensures them? Please do tell i am ready to short

@jamesdlow 6 ай бұрын

He sounded like Jeff Goldblum :)

@charleskilpatrick9704 6 ай бұрын

Appears to be a good way for the small retail investor to get screwed,

@TheRealRaggedyAndy 2 ай бұрын

How? it's been a lot of years.

@42dunbar 6 ай бұрын

The two CLO equity tickers I know of are ECC (one the guest works for) and OXLC. Does anybody know of any other CLO equity tickers?

@JamesG1126 6 ай бұрын

CLO equity is worth $0.

@42dunbar 6 ай бұрын

@@JamesG1126 Not what I asked but I bet you really wanted to say that.

@ejbarraza 6 ай бұрын

EIC and VTA (Volta Finance).

@42dunbar 6 ай бұрын

@@ejbarraza VTA doesn’t appear to be a valid US ADR (ticker). I thought EIC was a debt fund.

@robbie31580 Ай бұрын

CCIF

@jjreddick377 Ай бұрын

CDO = CLO ???

@edreeves121 6 ай бұрын

Saylor ad is a scam.

@BlockworksHQ 6 ай бұрын

what Saylor ad?

@coleb9410 6 ай бұрын

@@BlockworksHQ There's an AI video and voice ad of Saylor and the "CEO of Ripple" (separate ads but same scam) claiming to be giving away Crypto. It's pretty convincing.

@jjreddick377 Ай бұрын

We reject history

@IssaGedwar Ай бұрын

What is clos?

@jking1343 4 ай бұрын

Fuck it, im buying some JAAA puts. This market is as dependent on the fed put and increasing equity prices as CDOs were dependent on an increasing mortgage market

@Ourpetsheadsarefallingoff 6 ай бұрын

I’ll come back in March to see how this aged.

@TheRealRaggedyAndy 2 ай бұрын

What are your thoughts now?

@Ourpetsheadsarefallingoff 2 ай бұрын

@@TheRealRaggedyAndy Election year.

@TheRealRaggedyAndy 2 ай бұрын

@@Ourpetsheadsarefallingoff Give us more. lol

@Ourpetsheadsarefallingoff 18 күн бұрын

@@TheRealRaggedyAndystill killing it Tiger?

@havebadday7850 6 ай бұрын

How much do you wanna bet that CLOs will be the next 2008 😂

@summaryjudgment 6 ай бұрын

Sounds like a bomb waiting to explode...

@Xmj202 6 ай бұрын

This channel should show the stats of the asset managers and subscription sellers that come on here. His ecc fund is down 51% since its inception in 2014 Spx is up 142% over that time 😂

@stevecatpatrick8056 6 ай бұрын

Huh? Are you not looking at total returns? It's averaged 6.25% annualized return since 2014. You know you can't just look at price right?

@jackfarley4157 6 ай бұрын

@xmj202 look at total returns (including dividends), not just price.

@BlockworksHQ 6 ай бұрын

the publicly listed vehicle (ECC) has performed 87% since inception in 2014, including dividends. crushed HYG and BKLN which over same time period have yielded 32% and 34%, respectively.

@BigHenFor 6 ай бұрын

What's your stats so far?