Boaz Weinstein runs Saba Capital Management, a $5 billion hedge fund best known for picking fights with closed-end fund managers.

Now he’s picking a bigger one.

He’s tendering to buy shares in Blue Owl Capital Inc’s (NYSE:OWL) private credit BDC at 65 cents on the dollar.

Blue Owl’s retail investors have been trying to cash out of the fund, but redemption requests are piling up faster than the fund can pay.

Weinstein is stepping in with a lowball bid, betting that some investors would rather take 65 cents now than wait years in a queue.

The Pitch

Weinstein’s argument on Bloomberg’s Money Stuff podcast was blunt.

Retail investors were promised they could pull 5% of their money per quarter from these funds. That promise, he said, is “fire insurance that doesn’t work if there’s actually a fire.”

The fire is here. Cliffwater’s fund saw redemption requests spike from 4% to 14% in one quarter.

Blackstone Inc’s (NYSE:BX) flagship BCRED reported 7.9% this quarter. Starwood’s REIT has been gated for nearly four years. Investors want out and there’s no exit.

Weinstein says he’s offering one. Buy the shares at a discount, give trapped investors cash, and bet that the underlying portfolio is worth more than 65.

The Accusation

Private credit funds mark their own portfolios, and Weinstein says everyone knows the NAVs are too high.

JPMorgan Chase (NYSE:JPM)recently marked its book down hard while others haven’t followed, and the gap between how different banks price the same loans can be 25 points wide.

That matters because fees are calculated on NAV, so higher marks mean bigger paychecks for the manager.

Weinstein pointed to FS KKR Capital Corp (NYSE:FSK), recently trading at a 50% discount to book, where an analyst asked why management kept making new loans at 12% instead of buying back its own stock at half price.

If the NAV is real, that’s a guaranteed 100% return.

“Greed is laid bare,” Weinstein said.

The cracks started when distribution cuts hit.

Retail investors had been collecting roughly 1% a month like clockwork, and when payouts were trimmed, the redemption wave began.

The Contagion Risk

The worry is that this doesn’t stay contained.

Weinstein warned that falling NAVs force asset sales, which push NAVs lower, which trigger more redemptions. “I really think this could be a systemic nightmare,” he said.

Private credit could “infect” public markets when investors who can’t sell illiquid positions start dumping what they can.

Prediction markets are already pricing the spillover.

Kalshi’s 2026 U.S. recession contract hit 37%, up from under 21% days earlier in the month. Polymarket has it at 36%.

Weinstein suggested someone set up a prediction market on Cliffwater’s private credit funds next quarter redemptions. None exists yet.

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