00:00With our firm we have a publicly traded vehicle called New Mountain Finance Company and we've been very transparent since we started it in 11.
00:08We show loan by loan and the cash flow multiples. We have green, yellow, red lights. So 95 percent of our positions are green.
00:16Our loss rate's been extremely low for many years now. So we haven't had any particular issues.
00:23Why do you think the publicly traded BDCs, though, have done so poorly, well, did so poorly in 2025? And what do you expect for 2026?
00:31Yeah, I mean, I think personally I think they're oversold or and, you know, you get individual loans like there were the two asset back loans that went bad that were not BDC style loans to begin with.
00:43Some people don't know what sort of loans are in what books. So I think. Well, now that Mark Rowan's been writing about it, we all have. Well, that's right.
00:50Well, he's good at that. He's good at that. So, I mean, I think it's like anything else.
00:55The market will figure it out. And I'm hopeful for the space. And, you know, I'm a major owner of my own stock and a buyer, not a seller.
01:03So I think it will all work out. Bloomberg Intelligence did a survey at the end of the year of both fund managers and investors.
01:10And for the investors, it was macroeconomic and rate instability that was the biggest threat for the investor, for fund managers themselves.
01:18Their biggest threat was stricter regulation, which I realize there's some irony to that, because with this White House, the anticipation is looser regulation.
01:26How are you thinking about the regulatory environment when it comes to private capital in 2026?
01:31Yeah, I don't see any big clout about government regulation against private credit.
01:36And I think the banks have gotten some regulatory relief for from potential regulation, which could be good for them.
01:43It's not going to be bad for private credit, though.
01:44Well, you know, it's a huge world. So it's not like, you know, the big banks are usually competing for the very big syndicated loans.
01:52The complicated, higher-yielding $200 million buyout is probably not where they're set up to play anyways.
01:59And so it's not a one-winner and one-loser environment. I think there's room for everybody to do well.
02:05I mean, the narrative at the end of the year in the public markets that we watch so closely is that the big banks have come back, right?
02:12And that non-bank lenders, you know, because of what happened with the stocks, were out of favor.
02:19But you think that private credit has less structural impediments or less structural risk than the banking sector. How is that?
02:26Well, I think private credit, if it didn't exist, someone would have invented it.
02:31I mean, you know, private credit, our capital is locked up.
02:35It's not like you can't have a bank run on a permanent capital vehicle.
02:40We're less levered. Our capital is more stable.
02:44So, and we have teams, like the way New Mountain works, we have 300 people at the firm.
02:48You know, we own private equity companies, and it's the same team that owns a private equity business is advising the credit manager,
02:56is it a good loan in the industry that they know better than any credit analyst could know?
03:00So, I mean, I think it's a very good space.
03:03I think you'll see deal activity pick up this year.
03:05I think that will be good for everybody in the lending market.
03:09To that point, Steve, I can jump in, because deal activity really picked up in a big way for buyouts last year,
03:14for private equity, perhaps your favorite child, given your career history.
03:19But what we saw pick up was, like, these big mega cap deals.
03:22Do you think there's more space for broadening out of private equity,
03:26or is all the action still going to be in high quality, large cap deals?
03:29No, I think you're going to see a lot of action in regular way, private equity deals.
03:34I think it's already started under the hood.
03:36And I think you're going to see a lot of buying and selling of private equity companies in the traditional way.
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