Chapter 1: What challenges are private credit funds facing with investor redemptions?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Monday, March 16th, and I'm your host, Kim Kahn. Our top story so far.
Wealthy investors sought to pull more than $10 billion from some of the largest private credit funds in the first quarter, forcing managers to limit redemptions and threatening one of Wall Street's fastest-growing businesses.
The FT reports that funds run by Blackstone, BlackRock, Cliffwater, Morgan Stanley, and Monroe Capital agreed to honor roughly 70% of the $10.1 billion in redemption requests received so far. More withdrawals are expected in the coming weeks as Ares, Apollo, Blue Owl, Oaktree, and Goldman Sachs tally their figures.
Retail credit funds ballooned from $34 billion at the end of 2021 to $222 billion by the end of last year, according to Goldman Sachs.
Chapter 2: How is Alibaba preparing to launch its enterprise-focused AI agents?
That growth is now reversed, and Goldman expects the sector could shrink by $45-70 billion over the next two years. Morningstar analyst Jack Shannon put it bluntly, they will chase performance, they will leave the moment they sense danger. C.T. Fitzpatrick of Vulcan Value Partners told the FT, the air has come out of the balloon.
Chapter 3: What impact is AI having on recent S&P 500 earnings calls?
From flood of inflows to gates on the exits, private credit is hearing an echo it hasn't heard before. Among active stocks, Dollar Tree is choppy after better-than-expected quarterly results were offset by cautious guidance. The discount retailer sees adjusted EPS of $145 to $160 on revenue of $4.9 to $5 billion.
The midpoints, $152 and $4.95 billion, came in slightly below consensus estimates of $156 and $4.97 billion. Comparable sales are expected to rise 3 to 4%.
Chapter 4: How did the Oscars reflect the influence of AI in the film industry?
Alibaba is preparing to launch an enterprise-focused Agentech AI service as soon as this week. Bloomberg reports the tool will help companies deploy task-performing assistants as interest in AI agents accelerates across China. And Nebius is surging after meta-platforms committed to spend up to $27 billion over five years for access to advanced AI infrastructure.
Under the agreement, Nebius will provide $12 billion of dedicated capacity across multiple locations, powered by one of the first large-scale deployments of NVIDIA's Vera Rubin platform. In other news of note, a record 331 S&P 500 companies cited AI on earnings calls between December 15th and March 11th, according to FactSet. That's 68% of all calls during the period.
The figure dwarfs the five-year average of 149. Five years ago, AI was hardly mentioned. By sector, financials and infotech led with 67 calls each mentioning AI. Measured by percentage, infotech topped the list at 94%, followed by financials at 91% and communications services at 89%. Moving from Silicon Valley to Hollywood, Warner Bros. had a big Oscars night.
One battle after another took home six awards, including Best Picture and Best Director. Sinners, which led the field with 16 nominations, won four, including Best Actor and Original Screenplay. The only question now, when does an AI-generated film win an Oscar? Or does AI just start picking the winners?
And in the Wall Street Research Corner, Bank of America is out with its list of stocks that hedge funds love to short. Moderna tops the list with 18.3% of its floats sold short. Next up, Brown Forman, Supermicrocomputer, Charter Communications, and Fox.
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Chapter 5: What stocks are currently favored by hedge funds for shorting?
You can see all 20 names on the list in our story on Seeking Alpha. The link's at the top of show notes.
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