Dear Friend,

The last time Wall Street was slow to understand AI’s power problem, one boring stock did this: +1,700% in under two years.

Its name was Vertiv.

A $10,000 stake became $180,000.

Another, Modine, ran 1,900%.

Neither was a chip company. Neither was a household name. They just made the unglamorous equipment data centers can’t run without.

And got repriced when the world caught on.

Why it matters now: that was the first wave.

The wave hitting today is more than three times larger, and it runs straight through one small supplier almost no one has connected to Elon Musk yet.

The playbook is repeating.

The name isn’t on TV.

See the stock running the same playbook »

“The Buck Stops Here,”

Kelly Maguire
Behind the Markets

Thursday, June 25, 2026

One portfolio saw 40% of shares requested for buyback in a quarter.

For the first time, more money left non-traded private credit funds than came in. In Q1 2026, these funds returned about $7 billion to investors. They raised only $5 billion. Robert A. Stanger & Co., a research firm that tracks non-traded investments, reported the reversal.

A BDC is a business development company. It makes loans to mid-sized private firms. Non-traded BDCs do not trade on any stock exchange. You cannot sell your shares on the open market. Instead, the fund offers to buy them back each quarter. That quarterly buyback is the only way out.

The promise was simple. Put your money into private loans paying 8% to 12% yields. Get your money back each quarter if you need it. For years, it worked. New investors came in fast enough to pay the exiting ones. That era ended.

Three forces turned that promise into a pressure system. The loans take years to mature, but the exit window opens every 90 days. Public markets price those same loans 25% below where these funds mark them. Redeeming at full price is the rational move. The fund caps buybacks at 5% each quarter. So advisors request more for the next quarter to grab a bigger share of the pool. The cap that protects the fund feeds the next wave of demand.

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Non-traded BDCs hold private loans that are repaid over three to seven years. The cash trickles in slowly. But the fund promises investors a quarterly exit at full reported value.

For years, the gap did not matter. New money filled it. Q1 2025 brought in $12 billion of fresh capital. Q1 2026 brought in $4.9 billion. That is a 59% drop in one year. When inflows fall that fast, the fund meets redemptions from a shrinking pool.

Observation: Non-traded BDC fundraising fell 59% year over year in Q1 2026, per Stanger.
Interpretation: New investor capital was the real source of redemption liquidity. When it dried up, the tension between 90-day exit windows and multi-year loans became visible.

Publicly traded BDCs hold similar loans to similar companies. In Q1, the S&P BDC Total Return Index fell 10.1%. Over the same period, the Stanger Non-Listed BDC Index was nearly flat at negative 0.03%.

Same asset class. Two very different prices.

As of Q1, 80% of publicly traded BDCs traded below their reported book value. The average discount was nearly 25%. iCapital, an alternatives investment platform, tracked the data. Julian Klymochko, CEO of Accelerate Financial Technologies, reported similar figures.

Blue Owl Capital is one of the largest non-traded BDC managers. Its two public BDCs traded at discounts of 27% and 34%.

The public market says those loans are worth 75 cents. The non-traded fund offers to buy shares back at a dollar. Redeeming is not panic. It is arithmetic.

Observation: Public BDCs fell 10.1% in Q1. Non-traded BDCs reported flat returns. The average public BDC traded at a 25% discount to stated book value.
Interpretation: That gap creates a direct financial incentive to redeem at full reported value. The wider the gap, the stronger the pull.

Most non-traded BDCs cap quarterly buybacks at 5% of shares. When requests exceed that, the fund prorates. Everyone gets a fraction of what they asked for.

This is where the third gear turns.

In Q1, requests averaged 12.1% across the 12 largest non-traded BDCs. Data provider With Intelligence tracked the filings. Blue Owl's technology fund saw 40.7% of shares requested for buyback. Its larger credit fund saw 21.9%. Both paid out 5%.

An advisor who asked for 10% and got 2.5% learns a lesson. Next quarter, she requests 20% to get closer to 10%. Bank of America expects exactly this. Its analysts forecast Q2 requests will hit 52.9% at Blue Owl's tech fund. For the larger credit fund, 28.5%. The cap does not calm the system. It teaches people to ask for more.

Even the biggest player could not outrun this. In Q1, Blackstone raised its buyback cap to 7%. It injected $400 million of its own money and met 100% of requests. By Q2, requests climbed to 10% of shares. Blackstone reverted to the standard 5% cap. The workaround lasted one quarter.

Observation: Bank of America forecasts Q2 requests will reach 52.9% at Blue Owl's tech fund. Advisors are scaling up after proration.
Interpretation: Proration, the mechanism designed to protect the fund, is the mechanism that amplifies demand. It turns a one-time exit into a recurring, escalating cycle.

The system entered Q2 with a higher starting pressure. Bank of America expects requests to peak this quarter. They project easing into Q3 and a drop below Q1 levels by Q4. That timeline depends on two variables.

First, whether the price gap between public and non-traded BDCs narrows. If public BDC prices recover, the incentive to redeem at full value weakens. If they fall further, the incentive grows.

Second, whether inflows stabilize. New capital is the simplest way to meet redemptions without selling illiquid loans. Q1 inflows were the lowest in years. Q2 fundraising data will show if the trend is still worsening.

Each variable leaves a clear trail. Q2 redemption filings come first. They show whether the proration spiral accelerated. The public BDC discount to book value shows whether the incentive to redeem is growing or fading. Stanger's fundraising totals close the picture. If new capital returns, the math eases. If not, the gears keep turning.

Non-traded BDCs promised quarterly liquidity on loans that take years to repay. That promise held as long as new money kept coming in. Now more money wants out than in. The 5% redemption cap is both the system's brake and its accelerator.

Until next time,
The Navigator

© 2026 Behind the Markets. 4260 NW 1st Avenue, Suite #55 · Boca Raton, FL 33431. LEGAL DISCLAIMER: Personal results may vary. All investing involves risk of loss. Past performance is not a guarantee of future results. The information provided is for educational purposes only and does not constitute a recommendation to buy or sell any specific security.